Europe

MEPs adopt Public Sector Loan Facility agreement, boosting green transition

The European Parliament’s Committee on Budgets and the Committee on Economic and Monetary Affairs adopted on May 10 the provisional agreement resulting from inter-institutional negotiations on the Public Sector Loan Facility under the Just Transition Mechanism (PSLF) which will support the green transition in Europe to achieve the Union’s 2030 climate targets and an EU climate neutrality by 2050 at the latest.

The provisional agreement was adopted by 84 votes in favour, 6 votes against und 5 abstentions. The Plenary vote is scheduled for July 2021.

“The Public Sector Loan Facility will support the green transition in Europe to achieve the Union’s 2030 climate targets and a EU climate neutrality by 2050 at the latest,” German MEP Henrike Hahn, rapporteur on the Public Sector Loan Facility (PSLF) under the Just Transition Mechanism in the European Parliamentary Committee on Economic and Monetary Affairs, said after the vote.

“This Public Sector Loan Facility is very important to us as the third pillar of the Just Transition Mechanism. It is a key tool of the Green Deal to ensure that the transition towards a climate neutral economy takes place in a fair way, leaving no one behind,” Hahn said, adding that it addresses the social and economic effects of the transition focusing on the regions, industries and workers who will face the greatest challenges.

The public sector loan facility specifically targets public entities to implement projects to help to achieve the just transition providing support with the help of grants combined with European Investment Bank (EIB) loans.

“Our priorities for this file were met and I am particularly happy that we have succeeded to emphasise the need to integrate a gender perspective in the just transition process,” the Greens MEP said. “We ensured priority support to less developed regions and local municipalities to implement high standard projects for new jobs and new businesses. Priority will be given to projects located in less developed regions, to projects contributing to climate objectives and those being promoted by public entities that have adopted a decarbonisation plan. In the facility, we pay special attention to most vulnerable regions, with clear prioritisation criteria for projects and a co-financing rate for less developed regions with 25%,” Hahn added.

“I am also very happy that we managed to introduce an additional article with stringent criteria to avoid loopholes in case the facility will be opened to finance partners other than EIB, i.e., national promotional banks,” Hahn said, adding that in the future their lending policy will be consistent with EU environmental and social standards, good tax governance and transparency of projects financed will be ensured.

“We have also ensured that Taxonomy will be included as a tracking tool in the interim Commission evaluation,” the MEP said, adding that the Facility shall comply with a set of horizontal principles, including the Do No Significant Harm Principle.

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