Special EU fund for coal regions looks good but is costly, warns Czech study

Creating a new European fund to support coal regions – the Just Transition Fund – may look like a positive step for disadvantaged areas, but its administration is complex, costly and threatens its effective use, warns a new Czech study based on interviews with officials.

The Just Transition Fund (JTF) is available to regions with a heavy coal mining industry. The Czech Republic is one of the beneficiaries, as the country has three coal mining areas.

In 2019, the Czech and Polish governments pushed for special money for coal regions, saying otherwise they would not comply with the EU’s climate neutrality target.

The Czech Republic is now drawing money from the fund, but with difficulties as it may not be used effectively due to strict deadlines and limited national capacity, warns the European policy institute EUROPEUM study. JTF funds must be allocated by the end of 2026.

“Recently, the European Commission has tended to come up with new tools all the time: for COVID, the Ukrainian crisis, and Europe’s declining competitiveness,” said a senior official at the Czech Regional Development Ministry, who asked to remain anonymous.

“It (the European Commission) does it a lot for PR. If they put the funds under existing funds, they would get a little lost in them. But they want to say this is something extra, a new issue,” the source said.

The analysis warns that for each instrument, such as the JTF, a specific budget is needed to manage the fund. In the case of the JTF, 2.3% of the total fund has been earmarked for administration at the EU level, with additional money paid by member states to cover officials, offices, publicity and monitoring of the fund.

The process of setting up the JTF was further complicated by time constraints. The EU started preparing the fund a year and a half later than other funds in the 2021-2027 multiannual financial framework.

“Because of the pressure, there is a risk that hastily selected transition projects in the Czech Republic will not be of sufficient quality. The looming inefficiency of spending may undermine confidence in EU funds and the EU as a whole, and will not contribute to a fair transformation,” writes analyst Klára Votavová, author of the study, in her analysis summary.

However, some Czech officials expressed positive views concerning the JTF. Many pointed out that the fund had attracted above-average interest from the Czech regions concerned. The mere fact that money was earmarked for them was said to have activated the regions and encouraged them to discuss their development priorities.

“In any case, the example of the Just Transition Fund shows that in the early debates on the parameters of the EU’s post-2028 Multiannual Financial Framework, the European Commission and EU leaders should carefully consider whether they need to establish new funds to meet their objectives or whether slightly modified existing instruments will suffice,” Votavová said.

According to the analyst, the creation of a new fund may be attractive from a political or marketing perspective, but it always requires a large amount of financial, human and organisational capacity on the part of member states and is not necessarily worthwhile.

Cover photo: The Just Transition Fund (JTF) is available to regions with a heavy coal mining industry. The Czech Republic is one of the beneficiaries, as the country has three coal mining areas.