The European Commission accepted today, 26 April, a political agreement by the European Parliament and the Council on the Commission's proposal for a new Public Sector Loan Facility (PSLF). This means that now, all the proposals of the Just Transition Mechanism (JTM) have been agreed and are waiting the final approval by the Parliament and the Council.

The PSLF targets mainly public entities, creating advantageous lending requirements for projects that do not yield enough profit to be financially viable. It includes a combination of grants (€1.5 billion) from the EU budget and loans (€10 billion) provided by the European Investment Bank (EIB). The grant support will be combined with the EIB loan and alleviate the financial strain for beneficiaries while also improving the attractiveness of the investments. Advisory support will be given to beneficiaries through the advisory hub set up under InvestEU.

The principal components of the agreement are the following:

• Resources are €1.525 billion from the EU budget for the grant component and €10 billion of loans from the EIB.
• The main objective is to support public entities in addressing the socio-economic challenges of the territories most negatively impacted by the EU climate transition.
• The grant component shall be implemented under direct management.
• Grants shall be awarded in two steps: grants pursuant to calls for proposals not exceeding the national shares and grants awarded on a competitive basis at the Union level until exhaustion of remaining resources.
• Advisory support for the preparation, development and implementation of eligible projects shall be provided to beneficiaries through the advisory hub set up under InvestEU.
• Work programmes specifying eligibility conditions and criteria for project selection and for their prioritisation in case demand exceeds funding resources under national allocations.
• Award criteria, to be later detailed in the work programmes, which may be applied in case the number of eligible projects exceeds the available resources. Priority would be given to beneficiaries located in less developed regions.
• A list of horizontal principles to be respected by all investments, including the respect for fundamental rights, gender equality, non-discrimination, and social and environmental protections.
• An increased grant component for less developed regions, which could go up to 25% of the loan component.
• An increased allocation for technical assistance, to the benefit of project promoters in the less developed regions.

The PSLF will help in delivering the European Green Deal by tackling the socio-economic difficulties of the transition to climate neutrality in the most affected territories. Therefore, it will enhance not only the pillar of Just Transition Plans, but also the pillar of the Just Transition Mechanism and the one of a just transition scheme under InvestEU. As a whole, it is foreseen that the Facility will mobilise between €25 and €30 billion of public investments over the next 7 years, having the EIB as the main finance partner. However, it is possible to collaborate with different finance partners, in case of a possible future rise of capital. The Public Sector Loan Facility will be carried out under direct management by the Commission and the European Climate, Infrastructure and Environment Executive Agency (CINEA), and will offer assistance either to individual projects or through framework loans.

B2EU Consulting can help private or public actors to gain access to means of financial or legislative support. Our boutique consulting firm is specialized in European funds and can assist industries with positioning themselves favourably for financial support and a smooth transition to a greener future.

Image © European Parliament, 2020