The Modernisation Fund is an initiative established under EU Directive 2018/410 with the purpose of accelerating the transition toward a low-carbon economy in the European Union’s lower-income Member States.
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Composition and Contributions
The Fund is financed by a portion of the revenues generated from the auctioning of CO₂ emission allowances under the EU Emissions Trading System (ETS). In other words, part of the proceeds from the sale of these pollution permits is allocated to the Fund.
Beneficiaries and Entitlements
The primary beneficiaries are EU Member States whose gross domestic product (GDP) per capita is below 60% of the EU average. These States may use the resources of the Fund to finance projects aimed at modernising their energy systems, including improvements in building energy efficiency, the development of renewable energy sources, and the construction of smart grids.
Disbursement Procedure
Beneficiary States shall submit projects that comply with the criteria established by the European Union. Such projects are subject to evaluation, and upon approval, receive financing from the Modernisation Fund.
Purpose and Objectives
The principal objective of the Fund is to reduce the emissions gap among EU Member States and to foster investment in clean technologies in those States most in need. By modernising their energy systems, these countries can reduce their dependence on fossil fuels, improve air quality, and contribute to the EU’s climate targets.
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