The European Union’s Modernisation Fund allocated €2.4 billion on June 8th to support 31 projects in seven countries. These projects aim to modernize energy systems, reduce greenhouse gas emissions in energy, industry, and transport, and enhance energy efficiency. This disbursement is the largest one so far and will contribute to Europe’s transition towards environmentally friendly practices. By investing in these initiatives, Member States can decrease their reliance on Russian fossil fuels, meet their climate and energy targets for 2030, and contribute to the EU’s long-term goal of achieving climate neutrality by 2050.
Additional investments totaling approximately €7.5 billion have been made in Romania (€1.1 billion), Bulgaria (€197 million), Poland (€47 million), Croatia (€88 million), Latvia (€5 million), Czechia (€1 billion), and Lithuania (€1 million). These investments, funded by the proceeds from the European Emissions Trading System, aim to support renewable electricity generation, modernize energy networks, and enhance energy efficiency. These disbursements benefit 10 eligible Member States and represent the total amount disbursed from the Modernisation Fund since January 2021.
In Bulgaria, the Modernisation Fund aims to modernize the electricity distribution grid, facilitating the acceleration of electric transportation, storage deployment, and the decarbonization and decentralization of energy consumption and production.
- Croatia’s focus is on deploying photovoltaic and energy storage capacity for public water service providers, contributing to the development of sustainable energy infrastructure.
- In Czechia, the ENERGov Programme aims to enhance energy efficiency and energy savings in new buildings within the public sector, promoting sustainable construction practices.
- Latvia is focusing on the introduction of electric vehicles and the establishment of corresponding charging infrastructure, promoting the transition to cleaner transportation options.
- In Lithuania, the fund is assisting in the renovation of multi-apartment buildings, aiming to enhance energy efficiency and reduce energy consumption.
- Poland’s project supports cogeneration for district heating, promoting the use of combined heat and power systems to enhance energy efficiency.
- Romania is utilizing the fund to establish new renewable electricity production capacities, develop district heating systems, and improve gas infrastructure to replace coal-powered energy sources.
Beneficiary Member States have upcoming deadlines to submit investment proposals for potential support from the Modernisation Fund. The deadline for non-priority proposals is August 15, 2023, while the deadline for priority proposals is September 12, 2023.
Background
The Modernisation Fund is financed through the auction of emission allowances from the EU’s Emissions Trading System and aims to assist ten EU countries with lower incomes in their journey towards climate neutrality. The beneficiary nations include Croatia, Bulgaria, Estonia, Hungary, Lithuania, Poland, Romania, Slovakia, Czechia, and Latvia. The fund provides support for investments in renewable energy generation and utilization, energy efficiency, energy storage, modernization of energy networks (including district heating, pipelines, and grids), and facilitating a just transition in regions reliant on carbon-based industries.
The Modernisation Fund operates in conjunction with other European instruments, such as cohesion policy and the Just Transition Fund, complementing their efforts. It harnesses substantial resources to aid beneficiary Member States in their investments that align with the Fit For 55 package and the REPowerEU Plan. Under the responsibility of beneficiary countries, the Fund works closely with the European Commission and the European Investment Bank (EIB). With the revised EU Emissions Trading System (EU ETS) now enshrined into EU law as of May 10, 2023, the Modernisation Fund’s scope has expanded. It will provide financial support to Greece, Portugal, and Slovenia, in addition to existing beneficiary Member States, starting in 2024.
EIB ensures that its investment proposal assessment activities within the Modernisation Fund are kept separate from its regular financing and technical assistance operations. This separation is implemented to prevent any potential conflicts of interest and to comply with the activities mandated by the ETS Directive and the Commission Implementing Regulation of July 9, 2020.
