Just Transition or Just Talk? 2020

Executive summary

Just transition or just talk?

7 countries plan to stick with coal beyond 2030 – but look set to receive most of the Just Transition Fund.

4 countries plan to phase-out coal by 2030 – but will swap it for fossil gas.

7 countries are on track for a 2030 coal phase-out without a significant increase in fossil gas.

As part of its European Green Deal, the European Commission has proposed a Just Transition Fund, worth up to €40billion, to support the EU regions most affected by the transition to a low carbon economy.

This report analyses the final National Energy and Climate Plans (NECPs) of 18 EU Member States that are still using coal for electricity generation. We assess whether the plans for coal are in line with the EU’s climate commitments and whether the Just Transition Fund would therefore be used to support a real transition in these EU coal-countries. This report is the second part of a series and follows CAN Europe and Ember’s 2019 assessment of the draft NECPs: Just Transition or Just Talk?

To meet the EU’s commitments under the Paris Agreement and limit global temperature rise to 1.5°C, all EU countries need to phase out coal by 2030, and transition directly to clean electricity without increasing the use of other fossil fuels such as fossil gas.

Key findings of the NECP analysis

11 out of 18 EU coal countries do not have a Paris-compatible plan to phase out coal

No coal transition: 7 countries plan to stick with coal beyond 2030 – but look set to receive most of the Just Transition Fund.

Coal to gas transition: 4 countries plan to phase-out coal by 2030 – but will swap it for fossil gas.

Fossil-free transition: 7 countries are on track for a 2030 coal phase-out without a significant increase in fossil gas

No coal transition

7 countries do not plan to phase-out coal by 2030: Bulgaria, Croatia, Czechia, Germany, Poland, Romania & Slovenia. Total installed coal capacity across all 7 countries falls by just 42% in the next decade. 52GW of coal is expected to be operational after 2030, nearly all (~90%) of which is in Czechia, Germany and Poland.

Coal to gas transition

4 countries plan to phase-out coal by 2030 but with a significant increase in fossil gas: Greece, Hungary, Ireland & Italy.

Fossil-free transition

7 countries are on track to phase-out coal by 2030 – without a significant increase in fossil gas: Denmark, Finland, France, the Netherlands, Portugal, Slovakia & Spain.

Implications for the Just Transition Fund

Who gets what?

Our analysis demonstrates that without reform, the Just Transition Fund risks rewarding climate laggards at the expense of countries with ambitious and Paris compatible plans for their coal regions.

Under the existing methodology:

• Nearly two-thirds of the Fund will go to the 7 countries which do not plan to phase-out coal by 2030. In the long term, 2 of these countries (Bulgaria & Poland) are also planning a significant expansion of fossil gas use.
• More than 10% of the Fund will go to the 4 countries which plan to phase-out coal by 2030 but with a significant increase in fossil gas use.

Without national governments setting a clear timeline to go beyond fossil fuels, it is unclear how the Just Transition Fund will effectively support coal regions and communities through the energy transition.

NECPs indicate that over the longer-term (beyond 2030) coal-to-gas is planned to play a significant role in the electricity transition for both Bulgaria and Poland.

Policy Recommendations

Support from the Just Transition Fund must align with Paris-aligned targets

#1 Fossil Free

The European Parliament, Council and Commission must ensure that coal and all other fossil fuels, gas in particular, are fully excluded from the scope of the Just Transition Fund, and that no fossil fuel projects can be included in the Territorial Just Transition Plans. All loans and grants to be mobilised through all three pillars of the Just Transition Mechanism should comply with EU Taxonomy rules and principles. Coal regions need future-proof investments in the new economy – fossil gas is another dead-end.

#2 Conditional on Coal Phase-Out

The European Parliament, Council and Commission should render receiving support from the Just Transition Fund conditional on Member States’ coal phase-out commitments, the setting of closure dates of coal related activities, and the speed of the transition away from fossil fuels. Climate laggards should not get a free pass.

#3 Underpinned by Quality NECPs

The European Commission must hold EU governments to account on the quality of their National Energy and Climate plans, and make recommendations that will ensure that Member States properly update their NECPs for the inevitable phase out of coal in a socially just and orderly manner. The next iteration of the NECPs should reflect concrete plans to leapfrog from coal to renewable energy sources, while applying the energy efficiency first principle, to achieve the Union’s revised 2030 climate targets.

#4 Partnership Principle

The European Commission should set a clear, transparent and effective mechanism ensuring that the Territorial Just Transition Plans will be designed, implemented, and monitored with equal participation of all relevant stakeholders at local and regional levels – based on the partnership principle.

#5 Paris-compatible Energy Transition

All EU Member States should commit to phase out coal by 2030 the latest, and move towards renewables based energy systems underpinned by the energy efficiency first principle. This should be combined with ambitious emission reduction targets to help put the EU back on-track to meet the commitments of the Paris Agreement, while bringing numerous health, economic, environmental benefits, on top of green and decent jobs.

#6 Deliver Real Impact in Coal Regions

In their Territorial Just Transition Plans, coal regions should prioritise projects that have the highest added value in terms of supporting decent, new and green jobs, and avoid those projects which will cause lock-in to other fossil fuels. They should set concrete milestones and timelines for achieving climate neutrality in the next decades.

#7 Integrated Approach

The upcoming programming of all Cohesion Policy Funds must embrace the transition towards climate neutrality in an integrated manner. Member States should design their Territorial Just Transition Plans to ensure complementarity within all the various funding streams available.

Conclusion

Just transition or just talk?

The CECPs of the seven Member States (Bulgaria, Croatia, Czechia, Germany, Poland, Romania, Slovenia) who are in line to receive the lion’s share from the Just Transition Fund do not have plans to phase-out coal in the next decade. The NECPs show that a number of them are also planning a significant and increased role for fossil gas in their electricity transitions. Moreover, of the eleven countries expected to phase-out coal by 2030, our analysis indicates that four (Greece, Hungary, Ireland and Italy) are planning a significant coal-to-gas transition.

The EU must achieve climate neutrality by 2040 in order to do its fair share under the Paris Agreement, to limit the global temperature increase to 1.5C. This means all Member States should phase out coal by 2030, and all fossil fuels by 2040 at the latest.

National Energy and Climate Plans (NECPs) demonstrate that many Member States are not even in line with the European Green Deal’s 2050 climate neutrality objective, and its new emission reduction targets by 2030. Let alone compatible with the EU’s fair share under the Paris Agreement.

The Just Transition Fund can be an important instrument to help mitigate the social, economic and environmental impacts of this rapid energy transition in the regions that are most vulnerable. It is created as a tool to specifically support the European Green Deal’s mid-century climate neutrality objective, and 2030 emission reduction targets, without leaving anyone behind.

According to the International Trade Union Confederation (ITUC), “A Just Transition is an economy-wide process that produces the plans, policies and investments that lead to a future where all jobs are green and decent, emissions are at net zero, poverty is eradicated, and communities are thriving and resilient” [30]. As the first piece of legislation in the European Green Deal, the Just Transition Fund should reflect the objectives of just transition, and set the example for the other legislative processes.

However, without improvements to its design – as recommended in this briefing – the Fund risks rewarding climate laggards at the expense of real climate leaders.