What can be financed

The Modernisation Fund supports investments consistent with the 2030 climate and energy objectives of the Union, as well as the Paris Agreement. The majority of the resources of the Modernisation Fund (at least 70%) 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’:

  • generation and use of electricity from renewable sources;
  • improvement of energy efficiency (including in transport, buildings, agriculture, waste, and except in energy efficiency related to energy generation using solid fossil fuels);
  • energy storage;
  • modernisation of energy networks (including district heating pipelines, grids for electricity transmission, increase of interconnections among Member States); and
  • support to a just transition in carbon-dependent regions in the beneficiary Member States (including support to the redeployment, re-skilling and up-skilling of workers, education, jobseeking 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.

The Modernisation Fund cannot finance investments which involve solid fossil fuels, unless such investments relate to efficient and sustainable district heating in Bulgaria and Romania (Member States with a GDP per capita below 30% of the Union average in 2013).

List of confirmed and recommended investment proposals

Roles and responsibilities of the EIB

  • Confirming whether an investment submitted as a priority investment is a priority investment.
  • Conducting financial and technical due diligence of non-priority investments, including an assessment of the expected emission reductions.
  • Transferring the respective resources to the beneficiary Member States following the disbursement decision

Investments eligible under the Modernisation Fund are not required to be eligible under EIB policies (e.g. the EIB Energy Lending Policy), since the activities undertaken by the EIB in the Modernisation Fund, as mandated by the ETS Directive and Implementing Regulation, do not relate to EIB financing operations.

The selection and submission of investment proposals rests entirely with, and is the responsibility of, the Beneficiary Member States. It is possible for private and public entities to co-finance Modernisation Fund investment proposals. In this regard, the EIB can also receive requests for financing, and processes such requests as part of its normal lending activities, albeit separately from the Modernisation Fund activities of the EIB. In such cases, compliance with EIB’s rules and procedures including its lending policies will also need to apply.

The EIB’s investment assessment activities in the Modernisation Fund are ring-fenced from the standard EIB financing and technical assistance operations in order to avoid any potential conflict of interest in carrying out the activities mandated in accordance with the ETS Directive and the the Implementing Regulation.


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