pound 2.5 billion of EU ETS revenues invested in cleaner energy systems in 11 EU countries
The European Commission and the European Investment Bank have announced today the disbursement of pound 2.5 billion from the Modernisation Fund to support 51 energy-related projects in 11 EU Member States.
Financed by revenues from the EU Emissions Trading System (EU ETS), today’s disbursement brings the total funding made available from the Modernisation Fund to pound 23.2 billion since January 2021. The beneficiary Member States of this round of funding are Czechia (pound 516.8 million), Estonia (pound 44.8 million), Greece (pound 233.9 million), Croatia (pound 109 million), Latvia (pound 40 million), Lithuania (pound 169 million) Hungary (pound 552.3 million), Poland (pound 180 million), Portugal (pound 81.4 million), Romania (pound 636.9 million) and Slovenia (pound 20.2 million).
These investments will help modernise energy systems by improving energy efficiency in the energy, industry and transport sectors whilst supporting the reduction of greenhouse gas (GHG) emissions. The Modernisation Fund supports the lower-income beneficiary Member States to modernise their energy systems, meet their climate and energy targets, and implement their National Energy and Climate Plans. Today’s disbursement will also contribute to the competitiveness of EU industry by supporting modern, efficient and resilient energy infrastructure, boosting renewable energy generation and storage, fostering innovation and helping to reduce the EU’s imports of fossil fuels.
The 51 successful projects put forward focus on renewable electricity generation, use and deployment of renewable energy sources, the modernisation of energy networks and energy efficiency. Examples include:
decarbonisation of heat production in district heating systems in Czechia;
replacement of diesel vehicles with zero-emission electric trolleybuses for public transport in Estonia;
efficiency improvements of production processes in a number of industrial facilities with high energy-saving potential in Greece;
electricity grid digitalisation and development in Hungary;
geothermal energy for district heating in Croatia;
replacing diesel buses with electric buses and installing the required charging infrastructure in Latvia;
decarbonisation of industry through energy efficiency and substitution of polluting technologies in Lithuania;
thermal energy storage in district heating systems and improving the efficiency of multi-family residential buildings in rural areas in Poland;
energy efficiency programmes for public buildings in Portugal;
the development of stand-alone battery storage installations of electricity in Romania;
renewable electricity generation and energy storage capacities as well as modernisation and development of the electricity transmission and distribution network in Slovenia.
Background
The Modernisation Fund, financed by revenues from the auctioning of emission allowances under the EU ETS, is a solidarity instrument aimed to support 13 lower-income EU countries (with a gross domestic product per capita below 75% of the Union average in the years 2016 to 2018) in their clean energy transition. The beneficiary Member States are Bulgaria, Czechia, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Romania, Slovenia and Slovakia.
The Modernisation Fund supports investments in the generation and use of energy from renewable sources, energy efficiency, energy storage, modernisation of energy networks, including district heating, grids, and just transition in carbon-dependent regions. The Fund complements other EU instruments such as cohesion policy, the Recovery and Resilience Facility and the Just Transition Fund. It mobilises significant resources, which can help eligible countries support investments in line with the REPowerEU Plan and the Fit For 55 package. It operates under the responsibility of the beneficiary countries in close cooperation with the European Commission and the European Investment Bank.
The next deadlines for beneficiary Member States to submit investment proposals for Modernisation Fund support are 11 August 2026 for non-priority proposals and 8 September 2026 for priority proposals. Priority investments, accounting for over 90% of the portfolio, focus on modernising energy systems, reducing GHG emissions in energy, industry and transport, and improving energy efficiency. All other investments that qualify for the Modernisation Fund are considered as non-priority investments, subject to additional scrutiny.