Poland poised to be main beneficiary of EU’s €100-billion climate fund

Warsaw, Poland – Poland will be the top beneficiary of the €100-billion EU climate fund meant to help coal-reliant regions move away from fossil fuels and towards a greener economy and more sustainable energy mix.

According to figures released last week by the European Commission, the ‘Just Transition Fund’ (JTF) aims to generate at least €100 billion in public and private money to invest in EU regions that are the most dependent on coal and that might be the most impacted by the bloc’s plans to reach carbon neutrality by 2050.

How does the ‘Just Transition Fund’ work?

The EU’s new multi-billion climate fund is meant to provide “targeted support to help mobilize at least 100 billion € over the period 2021-2027 in the most affected regions, to alleviate the socio-economic impact of the transition”.

Evidently, this sum is not directly provided by pounding away in the EU and member states’ budgets. The Just Transition mechanism relies on an initial sum of 7.5 billion € in fresh EU funds allocated to member states according to their vulnerability and dependence on coal – a preliminary budget of which Poland should receive the maximum allowed sum of 2 billion € – by far the largest share ahead of countries like Germany (877 million €), Romania (757 million €) and the Czech Republic (581 million €).

The JTF’s firepower will then be enhanced by leveraging the EU’s Regional Development and Social Funds, as well as money from EU member states’ national contributions. At this point, Poland should benefit from 7.7 billion €, according to documents seen by Reuters. Lastly, the JTF plans to harness private investments that should bring the total amount of the mechanism to at least 100 billion € – including 27.3 billion € for Poland alone and 13.4 billion € for Germany.

Both countries should therefore receive approximately 40% of the JTF’s funds combined.

Note that the Just Transition Fund is only one part of the Green Deal unveiled by European Commission President Ursula von der Leyen and whose overall aim is to attract at least 1 trillion € in investments over the next ten years to make the EU carbon-neutral by 2050.

Why is Poland getting the lion’s share of EU climate funding?

Why then is Poland, which produces around 80% of its power from coal, poised to receive by itself more than 25% of the EU climate fund?

Despite Poland’s reliance on coal, the question is worth asking considering that Warsaw was the only country not to take part in the EU’s 2050 climate neutrality goal last year. Originally opposed by four countries (Poland, Czech Republic, Estonia and Hungary), the  three latter eventually signed up to the EU’s goal to achieve carbon-emission neutrality by mid-century, leaving Poland as the only country to negotiate an opt-out.

By refusing to sign up to the EU targets, Poland claimed it was impossible to achieve these targets in that time in its case, adding that, although it commits to transitioning toward low-emissions, it will do so at its own pace.

While some have criticized Warsaw’s reluctance to sign up to the deal and argued Polish officials only used it as a bargaining chip to receive more cash to finance its transition, others have argued that Poland couldn’t possibly, with full knowledge of the facts, adhere to the European Commission’s Green New Deal without putting in jeopardy large parts of its economy, energy infrastructure and entire coal-reliant regions.

Poland welcomes JTF but uncertainties remain

Immediately after the financial details were revealed by the European Commission, Poland welcomed the new EU climate fund. “This understanding for our position is… very good news for Poland”, Prime Minister Mateusz Morawiecki told reporters during a press conference in Prague.

The entire process, however, is far from over and faces an uphill battle as the European Council and EU Parliament are now set to delve deeper into the Commission’s proposal. Some new criteria and conditions might be added along the way, like the proposal of French President Emmanuel Macron, who in the past has repeatedly clashed with Warsaw over the issue, that no country could benefit from the funds if they haven’t signed up to the green pact.

A position shared by a number of environmental activists, like Sebastian Mang from Greenpeace EU who argued that “if this funding is really meant to promote a green transition, it must only be available to governments that are committed to that transition and have a clear plan to ditch coal. If they want the cash, the likes of Poland and the Czech Republic will have to prove they are serious about tackling the climate emergency”.

Even if implemented in its current version, the JTF won’t mean cash flowing in directly into beneficiary countries: funding applications should be thoroughly examined and include detailed regional transition plans evaluating how a region might be impacted in terms of potential job losses, national income levels and their carbon-intensiveness levels.

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