The European Commission developed a Just Transition Fund as part of the European Green Deal to provide financial support to its member states in transitioning to a low-carbon economy or carbon neutrality. This brief recommends a governance structure for the fund to ensure it complements the entire EU budget, accelerates economy-wide decarbonization, and helps close the low carbon gap between Eastern and Western Europe.

Specifically, the authors issue several recommendations for the fund: prioritize coal and carbon-intensive regions while also focusing on the transition needs of the rest of the economy; require that member states propose a Paris Agreement–compatible plan to phase out heavy emissions activities, including coal mining; finance the development of just transition strategies, which can mobilize other finance mechanisms; and work toward a clear goal such as climate neutrality by 2050.