EU Transition to Climate Neutrality

Mainstreaming climate in EU expenditure

30% - almost €550 billion from the EU’s budget for 2021-2027 and the recovery instrument Next Generation EU will be spent on climate action.



Just Transition Mechanism

The EU is mobilising at least €65-75 billion to address the social and economic effects of the green transition, focusing on the regions, industries and workers facing the greatest challenges.


Three pillars:

  1. Just Transition Fund

€17.5 billion expected to mobilise close to €30 billion overall focusing on:

  • productive investment in SMEs and creation of new firms
  • R&D, digital innovation and connectivity
  • clean and renewable energy
  • enhancement of circular economy and land restoration
  • retraining of workers and job seekers
  • activities in the areas of education and social inclusion
  1. Just Transition Scheme within InvestEU

Dedicated InvestEU budget guarantee scheme to mobilise €15 billion of investment in the most affected regions

  1. Public sector loan facility
  • €1.5 billion in grants from the EU budget
  • €10 billion in loans from the European Investment Bank (EIB)

The goal is to increase public sector investments for regional development needs to up to €30 billion.



Modernisation Fund

Around €14 billion (depending on the carbon price) between 2021 and 2030 will be allocated to 10 lower-income member states to be spent on:

  • renewable energy
  • energy efficiency
  • energy storage
  • energy networks
  • just transition in carbon-dependent regions

The Modernisation Fund will be financed through the auctioning of allowances under the EU emissions trading system (EU ETS), initially 2% of the total allowances for the 2021-2030 period.



Horizon Europe

This is the EU’s key funding programme for research and innovation, with a budget of €95.5 billion. Under the current long-term EU budget, the programme focuses on:

  • tackling climate change
  • achieving the UN’s sustainable development goals
  • boosting the EU’s competitiveness and growth


Innovation Fund

Around €10 billion between 2020 and 2030 (depending on the carbon price) will be provided to develop innovative low-carbon technologies in all member states, including:

  • technologies and processes in energy-intensive industries
  • carbon capture, use and storage
  • renewables
  • energy storage

The Innovation Fund will be financed through the auctioning of at least 450 million allowances under the EU ETS.



LIFE programme for the environment and climate action

€5.4 billion between 2021 and 2027 will support projects and actions covering:

  • nature and biodiversity
  • circular economy and quality of life
  • climate change mitigation and adaptation
  • clean energy transition


Beyond the EU

The EU and its member states are the largest providers of public climate finance in the world. In 2019 they provided €21.9 billion to help developing countries:

  • reduce emissions
  • build resilience against the effects of climate change