The European Commission announced today investments of nearly €3 billion (USD$3.2 billion) in clean energy projects in lower-income member states, with the new disbursements funded by revenues from the EU Emissions Trading System (EU ETS).

The new disbursements were made through the EU’s Modernisation Fund. Launched in 2018, with disbursements beginning in 2021, the fund was designed to support the modernization of energy systems and energy efficiency improvements at ten EU countries with lower incomes, including Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia, using EU ETS revenues. The fund was extended to thirteen countries in 2024, adding Greece, Portugal and Slovenia.

The new announcement marks the largest disbursement to date for the Modernisation Fund, bringing the total spending to €12.65 billion since January 2021. According to the EU Commission, the disbursements will support 39 projects across 10 countries, enabling the modernization of energy systems, reductions in greenhouse gas emissions in the energy, industry and transport sectors, and improvements in energy efficiency. Examples of selected projects include the deployment of photovoltaic and energy storage capacity for public water service providers in Croatia, production of renewable hydrogen and highly efficient co-generation in Slovakia, and upgrading of heavy-duty transport charging infrastructure in Poland.

Established in 2005, the European Emission Trading System puts a price on carbon emissions for key GHG intensive sectors, including electricity and heat generation, oil refineries, steel, cement, paper, chemicals, and commercial aviation, among others. Lat year, EU lawmakers agreed to increase the EU ETS’ scope, raising the direct emissions reductions required by covered sectors, and expanding the system to new sectors. The EU ETS is now expected to generate revenues of approximately €40 billion from 2020-2030.

Wopke Hoekstra, Commissioner for Climate Action, said:

“Today’s disbursement of nearly €3 billion marks another step forward in Europe’s transition toward climate neutrality. This record figure shows again the benefits of pricing carbon and investing the revenues in our green transition, in a way that benefits our citizens, our industries and our climate.”