European Investment Bank to Support EU Communities with US$10 Billion

The European Commission (EC) and the European Investment Bank (EIB) have decided to contribute €10 billion (US$10.1 billion) in support of areas most impacted by the transition away from fossil fuels as the continent struggles with how to decarbonize without leaving communities behind amid a severe energy crisis.

The Public Sector Loan Facility, the third component of the Just Transition Mechanism, whose agreement was signed by the two European organisations would support public investments in the areas most impacted by Europe’s transition to a climate-neutral economy. Over the following five years, it will combine grants from the EU budget of up to €1.5 billion with up to €10 billion in EIB loans.

According to a press release from the EIB, “The public sector loan facility offers public sector companies considering investment projects in impacted regions a combination of EIB loans and EU funds, effectively decreasing the financial load on public coffers.”

The locations or beneficiaries of eligible initiatives must be those regions that the EU Member States have identified in their Commission-approved territorial Just Transition plans as having the greatest energy transition problems. By clicking on this link, you can see these regions.

The EU grant component for each project in less developed regions, which are those with a GDP per capita that is less than 75% of the EU average, can be up to 25% of the EIB loan amount.

According to Elisa Ferreira, commissioner for cohesion and reforms at the EIB, “thanks to this agreement with the EIB, the Public Sector Loan Facility will offer public authorities in the regions and territories that most need support preferential lending conditions for projects that do not generate enough revenue to be financially viable.”

The European Commission and the European Investment Bank will continue to collaborate to achieve a just transition that leaves no one behind.

As part of its revamped RE Power EU policy, which was built to counteract the bloc’s dependence on fossil fuels, particularly Russian gas, the European Union (EU) dramatically increased and advanced its solar deployment targets in May.

However, as a “perfect storm” threatens the industry, increasing material and module costs as well as repeated requests to make sure that the most disadvantaged areas are not left isolated and worse off as part of the transition to clean energy might undermine these expedited plans.