The European Commission and the European Investment Bank have approved a new funding package worth €2.5 billion under the Modernisation Fund to support clean energy projects across the European Union. The latest allocation will finance 51 energy-related projects in 11 EU member states. The funding comes entirely from revenues generated through the EU Emissions Trading System (EU ETS), which uses carbon market proceeds to support climate and energy initiatives. With this latest investment, the Modernisation Fund has now distributed a total of €23.2 billion since it was launched in January 2021.
The funding is aimed at helping lower-income EU countries modernize their energy infrastructure, increase the use of renewable energy, improve energy efficiency, and reduce greenhouse gas emissions. The investment is also expected to strengthen Europe’s energy security by reducing dependence on imported fossil fuels while making industries more competitive through cleaner and more efficient energy systems.
Among the beneficiary countries, Romania received the largest allocation of €636.9 million. Hungary followed with €552.3 million, while Czechia received €516.8 million. Greece was allocated €233.9 million, Poland €180 million, Lithuania €169 million, Croatia €109 million, Portugal €81.4 million, Estonia €44.8 million, Latvia €40 million, and Slovenia €20.2 million.
The projects funded under this round focus on expanding renewable energy capacity, modernizing electricity networks, improving energy storage, and increasing energy efficiency. Several countries will also invest in cleaner transport and heating systems.
In Czechia, the funding will support the modernization of district heating systems to reduce emissions and improve efficiency. Croatia plans to use the financial support to expand geothermal energy for regional heating projects. Estonia will replace diesel-powered public transport vehicles with zero-emission electric trolleybuses, while Latvia will introduce electric buses and install new charging infrastructure to support cleaner urban transportation.
Portugal and Poland will use part of the funding to improve the energy efficiency of residential and public buildings, helping reduce energy consumption and lower emissions. Romania plans to develop standalone battery energy storage systems, which will improve grid stability and support the growing share of renewable electricity in the country’s energy mix.
The Modernisation Fund is designed to support 13 EU member states whose gross domestic product (GDP) per capita was below 75% of the EU average during the 2016–2018 period. Although funding in this round was distributed among 11 countries, Bulgaria and Slovakia are also eligible to receive support under the programme.
The fund operates alongside other EU financial mechanisms, including the cohesion policy and the Just Transition Fund, to help member states achieve climate and energy targets. Looking ahead, eligible countries can submit applications for non-priority projects until August 11, 2026, while proposals for priority projects, which account for more than 90% of the fund’s portfolio, must be submitted by September 8, 2026. The continued investments are expected to accelerate Europe’s transition toward a cleaner, more resilient, and sustainable energy system.
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