27 Apr, 2021

New EU fund to facilitate green transition in public sector

On 26 April, the European Parliament and European Council agreed on a new fund, the Public Sector Loan Facility (PSLF). This fund will help kick-start the green transition in Europe and support its success, by ensuring that promising projects in all sectors are paired with investments and funding to contribute to a greener future. The PSLF is an essential pillar of the Just Transition Mechanism (JTM), which was created to allow European regions to use the opportunity of the COVID-19 crisis to decarbonise local economies, prioritising those that have less capacity to bear the costs of the transition.

The Facility will also allow the public sector and local authorities to act as driving forces behind regional variations of the European Green Deal. It will facilitate new public sector projects, ideas and initiatives by pairing them with necessary funding through loans and grants. The Renew Europe Group in the European Parliament has paid particular attention to ensuring that the final agreement on the PSLF allows easy access to financing for beneficiaries, provided they respect the rule of law and their investment projects meet the required environmental and climate objectives.

Nicolae Ștefănuță MEP (USR, RO), Renew Europe spokesperson on this dossier within the European Parliament Committee on Budgets (BUDG), said: "Renew Europe has fought for increasing the budget for technical assistance to help less developed regions draft and submit quality projects. We have also secured larger grants for them. One of the EU Green Deal's promises was to leave no one behind in the green transition, which is both costly and challenging for poorer regions of the EU. However, this commitment is also about people, to make sure that no one is left behind, and that everyone is included in the new, sustainable economy."

Linea Søgaard-Lidell MEP (Venstre, DK), spokesperson for Renew Europe in the European Parliament Committee on Economic and Monetary Affairs (ECON), added: "It is important that the green transition succeeds in all corners of the EU and all in sectors. I am therefore delighted that the EU has reached an agreement on the Public Sector Loan Facility where green transition and climate aspects are at the core of the Facility. Renew Europe has worked hard to ensure that Facility-funded projects should be in line with the Taxonomy requirements and updated climate and energy goals, which will safeguard public funding for projects that contribute to our common EU goal of climate-neutrality."

Throughout the interinstitutional negotiation process, the Renew Europe Group has been insistent that funds under the Facility should only be available to regions whose respective Member States have a territorial Just Transition Plan approved by the European Commission. Moreover, Renew Europe has made sure that technical assistance and advisory support will be available to beneficiaries, increasing its envelope to EUR 35 million, including at the application stage of the process. Renew Europe has also insisted that free competition should not be distorted by the Facility more than necessary for the achievement of its objectives, and that projects should be published in order to strengthen accountability and transparency at the local level.

The PSLF is based on a system of grants and loans for regional public entities. Grants will be sourced from the European Union budget and loans granted by the European Investment Bank, via local financial partners. As many lagging regions lack sufficiently solid banking and financial structures, legislators have provided for increased subsidies to them.

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