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The EU’s Just Transition Fund: Hope for Europe’s coal-dependent states

Jacob Stokes | Europe and Eurasia Fellow

On 14 January, the European Union’s policy commissioner Elisa Ferreira unveiled details of the much anticipated $7.5 billion Just Transition Fund (Fund). A critical financial component of the European Green Deal, the Fund will provide financial aid to states in the pursuit towards climate neutrality–especially those dependent on coal and shale oil.

The EU has set itself an ambitious target of achieving climate neutrality by 2050, with a net-zero greenhouse gas emissions economy. Meeting this target requires a rapid phasing out of fossil fuels, something which is likely to have substantial socio-economic consequences for coal-dependent regions, most notably Poland, Bulgaria, the Czech Republic and regions of East-Germany. The Fund will provide grants to regions where the social and economic effects of the transition will be hardest felt. The Fund will also support the reskilling of workers for employment in new sectors, assist in expanding small and medium-sized enterprises in the renewable energy sector, and finance the renovation of buildings for the establishment of new industries.

The allocation of funds is based on several factors, namely; a state’s greenhouse gas emissions and production of peat and oil shale, the number of jobs in coal and carbon-intensive regions, and its gross national income per capita (a state’s final yearly income divided by its population).

Poland is set to receive the largest slice of the Fund; €2 billion, despite its refusal to commit to the 2050 emissions-neutrality goal agreed upon by other EU members in December last year. Following the December meeting, it was agreed that Poland would be exempt from the agreement for the time being, with Polish Prime Minister, Mateusz Morawiecki, saying that Poland will be “reaching climate neutrality at its own pace”.

The European Green Deal has been a disconcerting process for Poland. The country is heavily reliant on coal-fired power stations, with 80 per cent of the country’s energy consumption coming from coal, higher than any other EU member state. Not only that, but of the 235,000 workers employed in the coal sector in Europe, almost half live in Poland, with the region of Silesia accounting for 82,500 coal jobs alone. Poland is already struggling with the demands of the changing energy sector; it is predicted the country will fail to meet its renewable target which requires at least 15 per cent renewable energy consumption, despite importing a record amount of electricity in 2019.

Other EU states are struggling with the transition away from coal consumption as well. For example, during the transition to clean-energy, regions in the Czech Republic and Bulgaria are expected to lose up to 10,000 coal related jobs by 2030. The over-reliance on the coal and mining sectors means the share of coal jobs is high amongst the economically active population in the Czech Republic and Bulgaria, leaving both states with economic sectors that are severely underdeveloped.

The most pressing matter for Poland, the Czech Republic and Bulgaria as the transition to clean energy comes into effect is ensuring adequate re-employment opportunities exist for the current coal-mining workforce. Europe has a diverse range of mines focused on precious metals and base metals that have a high demand for labour and require a similar skill set to those used in coal mines. These mines provide an easy avenue for coal miners to secure employment during the transition due to the limited training required to adapt to new roles. However, it is unlikely these mines will exist within the same region (or even country) as the pre-existing coal mines, meaning coal workers will need to relocate to secure employment, with these mines unlikely to have the capacity to offer employment to all.

Alternatively, regions with established solar and wind industries will provide suitable re-employment opportunities without the need for worker relocation. However, this will require substantial reskilling. States will need to establish training facilities that offer comprehensive re-training programs including apprenticeships and on the job training, something which will be simple in regions with existing universities and research centres. Poorer regions however may struggle to provide the necessary facilities to reskill such a large number of workers, especially as the renewable energy sector has a greater demand for employees with higher qualifications.

It is these difficulties that EU leaders hope the Just Transition Fund will address. Coal-dependent states such as Bulgaria, the Czech Republic and Poland need the support of the Fund to help diversify their economies, develop new energy infrastructure, and create new employment opportunities, especially in the renewable energy sector. Yet, it is important the EU puts its people first and pays close attention to the industries and workers most affected by the transition. Convincing Poland to agree to the terms of the European Green Deal is vital to ensuring the success of the transition. All member states must be pulling in the same direction, or else some states will be left behind.

Jacob Stokes is the Europe and Eurasia Fellow for Young Australians in International Affairs.


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