On July 9, the Commission adopted the rules on the operation of the Modernisation Fund, an EU solidarity funding mechanism to support 10 EU Member States in their transition to climate neutrality by helping to modernise their energy systems and improve energy efficiency. The Member States to benefit by the Modernisation Fund are Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia.
Set up under the revised EU Emissions Trading System Directive, the Modernisation Fund will allocate around EUR 14 billion from the auctioning of allowances from the EU Emissions Trading System for the period 2021-2030, depending on the carbon price. Every beneficiary Member State has its own share of allowances to be used under the Modernisation Fund, as determined by the revised EU Emissions Trading System Directive.
The Modernisation Fund will support low-carbon investments in the generation and use of energy from renewable sources, energy efficiency, energy storage, modernisation of energy networks, including district heating, pipelines and grids, and a just transition in carbon-dependent regions, supporting the redeployment, re-skilling and upskilling of workers, education, job-seeking initiatives and start-ups. Each beneficiary Member State can determine its own investment strategy within these areas.
As one of the key funding instruments of the European Green Deal Investment Plan contributing to the objectives of the European Green Deal, it will increase energy security in the beneficiary Member States by supporting increased interconnections and transformation of energy networks, enhance the financing of renewable energy sources, and help make the economies and the energy sectors of the beneficiary Member States greener and cleaner, providing a boost to the green recovery.
The Modernisation Fund will be operational in January 2021 under the responsibility of the beneficiary Member States, who will work in close cooperation with the European Investment Bank (EIB), the European Commission and the Investment Committee set up for the purpose of the Modernisation Fund.