Audit stalls €127 million in Bulgarian coal funds

More than 500 small businesses in Bulgaria's coal heartlands had their transition grants approved. They hired lawyers, signed leases, ordered equipment. Then the money stopped. An extraordinary audit of the grant selection procedure has frozen roughly €127 million in EU-backed funding for firms in Stara Zagora, Kyustendil and Pernik trying to build something after coal (BTA, Vesti). A ministry can wait for legal certainty. A ten-person workshop with a supplier deadline cannot.

This freeze lays bare a flaw in how Europe pays for its green transition. The money exists. The projects are approved. But converting budget lines into paychecks keeps failing at the last step.

How the money gets stuck

The Just Transition Fund, the EU pot designed to cushion coal regions against decarbonisation, doesn't work like a direct transfer. Brussels sets the rules and the budget; national governments design programmes, run grant calls, score applications and pay beneficiaries through a long chain of checks (Regulation 2021/1060). Bulgaria channels its share, roughly €1.15 billion, through its regional development programme for the three coal regions and surrounding municipalities (BTA, Economic.bg).

That chain has many joints where things seize up. Deputy Prime Minister Atanas Pekanov told parliament the audit was triggered by doubts about whether SME selection criteria were correctly applied. He stressed it targets the procedure's legality, not individual firms. If the selection was flawed, paying quickly could lock in bad allocations and trigger EU recovery demands later. That logic is sound. But according to Pekanov's own figures, about 40% of the fund had been contracted while only 7.5% was actually paid out (Vesti). The gap between "contracted" and "paid" is where the human cost sits.

A small firm that planned hiring around an approved grant faces a cash squeeze it never budgeted for. Training programmes for displaced miners lose their point if no employers are ready to hire graduates. And EU rules cancel budget commitments ("decommitment") if countries fail to convert allocations into verified spending before the deadline (Regulation 2021/1060).

Paper approvals, missing cash across Europe

Bulgaria's freeze is the sharpest version of a pattern across Europe's coal belt.

Romania has €2.14 billion in Just Transition funding for six counties, but investigative reporting found the programme effectively blocked, with 500 submitted projects awaiting funding and absorption near zero (PressOne, EUalive). Many instruments remain stuck in relaunched application rounds (ADR Vest).

Poland shows the mirror problem. Miners can take severance packages of 170,000 złoty net (roughly €40,000), but accepting means giving up the right to return to the sector (Rzeczpospolita, Business Insider Polska). While severance flows quickly, the regional job programmes meant to replace that income are still processing applications, some with timelines stretching into 2027.

Germany, with far stronger administrative capacity, still struggles. In North Rhine-Westphalia, only €670.5 million of more than €2 billion available had been approved, prompting rule changes to prevent funds from lapsing (WDR). Anchor projects like a Deutsche Bahn maintenance plant in the Lausitz (around 1,200 planned jobs) take years to deliver (Tagesschau).

The European Parliament warned in 2025 that low absorption rates risked deepening regional gaps rather than closing them (European Parliament). The European Court of Auditors separately assessed whether coal-region support was producing real outcomes, not just formal spending (European Court of Auditors).

Who actually pays for this

The cost of delay falls unevenly. Large consultancies and well-capitalised firms can bridge a six-month freeze. A family workshop in Stara Zagora that committed to equipment purchases on the strength of an approval letter probably cannot. Workers who complete retraining arrive at the end with fewer employers hiring.

EU subsidy schemes carry real fraud risk: OLAF (the EU's anti-fraud office) has uncovered €17 billion in irregularities since 1999 (European Commission). Without checks, connected firms capture grants meant for viable local employers. Controls protect honest applicants, taxpayers, and the political legitimacy a "just" transition depends on. But a transition policy can fail two ways: by funding the wrong projects, or by funding the right ones too late.

Bulgaria's freeze, Romania's deadlock, Poland's severance-before-jobs gap and Germany's multi-year delivery lag all raise the same question: can Europe's decarbonisation funding convert allocations into local employment before the communities it promised to protect lose patience, credit and people? If the cash gap persists, the EU won't just lose funds to decommitment deadlines. It will lose the local employers the transition was supposed to create.