What can be financed

The Modernisation Fund supports investments consistent with the climate-neutrality objectives of the European Union, as well as the Paris Agreement.

The beneficiary Member States may use the Modernisation Fund to finance investments involving the adjacent Union border regions when this is relevant to the energy transition of beneficiary Member States.

No support from the Modernisation Fund, with some exceptions, shall be provided to any investments related to energy generation based on fossil fuels.

The majority of the resources of the Modernisation Fund (at least 80%) must be invested in priority areas specified in Article 10d(2) of the ETS Directive. Investments in these areas are referred to as ‘priority investments’:

Renewable energy

Generating and using electricity from renewable sources.

This includes:

  • renewable hydrogen
  • heating and cooling from renewable sources

Energy efficiency

Reducing overall energy use through energy efficiency.

This includes:

  • industry
  • transport
  • buildings
  • agriculture
  • waste

Energy networks and storage

Energy storage and modernising of energy networks.

This includes:

  • demand-side management
  • district heating pipelines
  • grids for electricity transmission
  • increase of interconnections among Member States
  • infrastructure for zero-emission mobility

Energy equality

Supporting low-income households, including in rural and remote areas, to address energy poverty and to modernise their heating systems.

Just transition in carbon-dependent regions

Supporting a just transition in the beneficiary Member States.

This includes:

  • support to the redeployment, re-skilling and up-skilling of workers
  • education
  • job-seeking initiatives and start-ups

in dialogue with social partners

All investments qualifying for the Modernisation Fund but falling outside the priority areas are considered as ‘non-priority investments’.
The Modernisation Fund can cover up to 70% of the relevant costs of non-priority investments, as long as the remaining costs are financed from private sources.

By the numbers

The Modernisation Fund has supported investment proposals of ten Member States to meet their 2030 climate and energy targets. The proposals will, among others, reduce greenhouse gas emissions in energy, industry and transport, and improve energy efficiency. They are funded by revenues from the EU Emissions Trading System (EU ETS).

List of confirmed and recommended investment proposals


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