The City of Joensuu in Finland receives €18 million EU grant and €120 million EIB loan for advancing a just transition and sustainable urban development

The urban development project in Joensuu is supported by the European Union under the Public Sector Loan Facility (PSLF), with a grant of €18 million complementing a €120 million loan from the European Investment Bank (EIB) and bringing the total project budget to €160 million. The remaining financing is provided by the City of Joensuu through its own resources (€22 million).

The project will help the City of Joensuu and the North Karelia region prepare for the planned end of peat-based energy production by 2030. As the region shifts towards cleaner energy sources, the project aims to create jobs, support local businesses and improve public services.

Working together with housing provider Joensuun Ellin Kodit, the city will build and renovate schools, childcare centres and student housing, as well as improve cultural facilities, such as the Joensuu Art Museum and the Joensuu City Library.

These initiatives are designed to make everyday life better for residents by providing modern learning environments, affordable student accommodation and improved community spaces. Construction work will also create employment opportunities and generate business for local companies.

Children and young people are a key focus of the project. New and renovated schools and childcare centres will be designed to support different learning needs, including those of neurodivergent children. Features such as quiet areas, accessible layouts and sensory-friendly design will help create welcoming and supportive environments for everyone.

Sustainability is another priority. The buildings will use energy-efficient designs, low-emission materials and other environmentally friendly solutions. It will also encourage the uptake of innovative and sustainable goods and services. The new and renovated buildings are designed to achieve high energy performance standards and are expected to reduce CO₂ emissions, contributing to a reduction in emissions from the built environment, which accounts for nearly 40% of energy use and more than 30% of greenhouse gas emissions in Finland.

The project shows how EU grant support through the PSLF with long-term EIB financing and local investment can work together to help regions adapt to economic change while improving public services, creating jobs and supporting a cleaner future.

Paloma Aba Garrote, Director of CINEA, said:

This project shows how the European Union, through CINEA and other partners, supports regions most affected by the transition to a low-carbon economy. By investing in local initiatives that put people, especially young people, at the heart of change, it helps create a more sustainable and inclusive future. At CINEA, we are proud to manage projects with such a positive impact and to help turn them into reality, contributing to a greener, more resilient future that leaves no one behind.

Emma Toledano, Deputy Director-General for Programme Implementation at the European Commission's DG REGIO, added:

The Sustainable Future project in Joensuu is all about building a fairer and greener future for everyone. By renovating and building new schools, day-care centres, cultural spaces, and student housing with modern and energy-efficient buildings, we're creating healthier, more inclusive and more inspiring places for people to learn, live, and thrive. DG REGIO is committed to backing these investments in North Karelia. Europe's path to climate neutrality should ensure that benefits are shared and communities are not left behind.

Jere Penttilä, Mayor of the City of Joensuu, stated:

The financing helps us build environmentally friendly and energy-efficient buildings for residents to use. It enables us to advance Joensuu's ambitious goal of becoming carbon neutral. In the coming years, we will build, among other things, a new swimming hall as well as daycare centers and schools. In addition, we will renovate the city's Art Museum and main library. These projects are highly significant not only for the residents of Joensuu but also for people living in the surrounding areas. The loan granted by the EIB and the funding provided by CINEA are of great importance to us.

EIB Vice-President, Karl Nehammer, added:

Investing in schools, childcare facilities and student housing means investing in people and in the future of the region. This project will help Joensuu and North Karelia strengthen their attractiveness, support economic development and improve quality of life for residents. Together with the European Commission, the EIB is proud to support investments that promote a fair transition while creating lasting benefits for local communities.

Background

The Public Sector Loan Facility (PSLF) was established by the European Union as one of the three pillars of the Just Transition Mechanism (JTM) to ensure that the transition towards climate neutrality leaves no region behind. By supporting investments in territories facing the most transition challenges, the PSLF contributes to a fair transition for all, while strengthening competitiveness.

The PSLF supports public and public-mandated entities in implementing investments that address the social, economic and environmental impacts of the climate transition in the most affected EU regions. It combines loans from the European Investment Bank (EIB) with grants from the European Commission, enabling projects aligned with the Territorial Just Transition Plans (TJTPs) prepared by EU Member States.

The first call for proposals, organised around ten intermediate cut-off dates and implemented based on national allocations, was open from 19 July 2022 to 31 December 2025. Read about its results in the CINEA article on Advancing the Just Transition in Europe: Results of the first PSLF call for proposals - European Climate, Infrastructure and Environment Executive Agency

Building on the first call, a second call for proposals was launched on 23 October 2025. The call is open to all EU Member States on a competitive basis, without pre-allocated national shares.

The implementation of PSLF has been entrusted by DG REGIO to CINEA.

DG REGIO

The Directorate-General for Regional and Urban Policy (DG REGIO) is the department of the European Commission responsible for EU policies on regions and cities. It develops and carries out the Commission's policies on regional and urban policy. It assists the economic and social development of the developed and less developed regions across the European Union.

CINEA

The European Climate, Infrastructure and Environment Executive Agency (CINEA) is an Executive Agency established by the European Commission to implement parts of EU funding programmes for transport, energy, climate action, environment and maritime fisheries and aquaculture. CINEA aims to assist its beneficiaries, establish strong partnerships, deliver high-quality programme and project management, foster effective knowledge sharing and create synergies between programmes - to support a sustainable, connected, and decarbonised Europe.

EIB

The European Investment Bank (EIB ) Group is the financing arm of the European Union, owned by the 27 Member States, and one of the largest multilateral development banks in the world. In 2025, the EIB Group signed €100 billion in new financing and advisory services for over 870 high-impact projects under eight core priorities that support EU policy objectives : climate action and the environment, digitalisation and technological innovation, security and defence, territorial cohesion, agriculture and the bioeconomy, social infrastructure, strong global partnerships and the savings and investments union. Beyond long-term loans for large infrastructure, the EIB Group crowds in private investment for high-risk innovative projects and businesses, with a growing role in Europe's markets for venture debt, venture capital, guarantees and securitisations.