A regional model-based assessment of the socioeconomic impacts of EU climate neutrality pathways and the effectiveness of the Just Transition Fund

Journal article, 2026

Europe has committed to turning climate neutral by 2050 in a just and socially fair way. The low-carbon transition entails a transformation of all production and consumption processes in a capital-intensive and skill-demanding way that can increase regional challenges. This study aims at exploring the spatial implications of the EU carbon neutrality pathway by assessing the socioeconomic impacts at the regional (NUTS2) level. We do this by employing GEM-E3-R, a hybrid Computable General Equilibrium model, to perform a scenario analysis of the Fit-for-55 package and towards climate neutrality in 2050. In addition, we assess the macroeconomic contribution of the established Just Transition Fund by incorporating in detail the demand and employment opportunities generated by the associated JTF measures. We find that while regional level impacts are driven by country-level implications, key regional specificities result in diverging effects. Coal-dependent regions face macroeconomic losses while regions with high renewables potential or the capacity to produce clean energy and low-carbon technology goods benefit the most. Overall, the demand generated by the JTF measures brings small positive effects, but the expected macroeconomic costs of the transition are not counterbalanced entirely.