EU Cohesion Policy: More than €465 million for a just climate transition in Finland

Finland will receive more than €465 million from the Just Transition Fund (JTF), thanks to the adoption today of its Territorial Just Transition Plan (TJTP). This JTF funding represents about 24% of the Cohesion Policy allocation for Finland in 2021-2027 and supports its ambition to reach climate neutrality by 2035 by making that path socially just and fair for all citizens.

The JTF will invest in the 14 regions where the peat transition will have a substantial economic and social impact. Those regions are South Karelia, South Ostrobothnia, South Savo, Kainuu, Central Ostrobothnia, Central Finland, Kymenlaakso, Lapland, Ostrobothnia, North Karelia, North Ostrobothnia, North Savo, Satakunta and 4 municipalities of Pirkanmaa, namely Punkalaidun, Virrat, Parkano and Kihniö.

Phase out of peat extraction

Finland is one of the main producers and main consumers of peat in Europe. 90% of the peat produced is used as an energy source. The CO2 intensity of peat-based energy production is equivalent to that of coal-based production. In Finland, the JTF aims to halve the energy use of peat by 2030. To support the transition to a just low-carbon economy, the Fund will specifically support the diversification of livelihoods, revitalising economic structures and boosting employment by reskilling and upskilling the workforce working in peat extraction and related sectors, especially young people. For example, it will help develop peat industry operators’ competences in wood harvesting and peatland restoration in order to create new businesses and new jobs. Furthermore, peat fields will be restored back to carbon sinks where possible.

Support for green jobs and SMEs

The JTF will be directed at jobs in the green economy, new green technology solutions and related new business opportunities. The Finnish plan will support about 1,900 SMEs in transition regions, which are suffering from economic decline and specific challenges caused by peripheric locations. The Fund will also provide new opportunities for businesses to cooperate with research institutes: around 4,000 businesses will benefit from this opportunity. Thanks to this, 1,800 new innovations, services or products are expected. The aim is to create 3,700 new jobs in the areas most significantly impacted by the transition to a climate neutral economy.

Background 

The JTF supports territories that are particularly affected by the transition towards a climate-neutral economy. The TJTPs identify these territories with the Commission during the negotiations of the 2021-2027 Partnership Agreements and the associated programmes. The Commission approved the Partnership Agreement with Finland in May 2022.

The Territorial Just Transition Plans for Finland have been adopted as part of a multi-fund programme for the European Regional Development Fund, the European Social Fund+ and the Just Transition Fund.

The close consultation with local partners permitted to identify the challenges and development needs in each territory, and the objectives to be met by 2030. TJTPs also identify the planned actions with specific governance mechanisms.

The approval of the TJTPs also opens the door to dedicated financing under the other two pillars of the Just Transition Mechanism (JTM): a just transition scheme under InvestEU and a Public Sector Loan Facility for Just Transition that combines Commission grants with European Investment Bank loans.

The JTM is a key tool to ensure that the transition towards a climate-neutral economy happens in a fair way, leaving no one behind. It provides targeted support to help mobilise around €55 billion over the period 2021-2027 in the most affected regions. Lastly, the Just Transition Platform helps to accelerate the just transition by involving all stakeholders sharing experiences and best practices.

Upon request by the Finnish Authorities, the Commission provided tailor-made technical expertise for the preparation of the TJTPs. Support included the analysis and assessment of the social, economic, and environmental impact of the transition, as well as an action plan to ensure the just transition in the concerned regions. The support was provided by the Technical Support Instrument under DG REFORM.