COMMISSION STAFF WORKING DOCUMENT EVALUATION Evaluation on the operating rules of the Modernisation Fund
Date: 2026-07-17
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU emission allowance, EU financial instrument, EU investment, auction sale, energy efficiency, greenhouse gas, reduction of gas emissions, renewable energy, tradeable emission permit

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 17.7.2026  SWD(2026) 197 final  COMMISSION STAFF WORKING DOCUMENT  EVALUATION  Evaluation on the operating rules of the Modernisation Fund  {SWD(2026) 198 final}  
 
 
Table of contents 

1. 

INTRODUCTION ................................................................................................................................ 3 

1.1 

1.2 

Methodology applied ..................................................................................................... 4 

Methodological robustness and Limitations .................................................................. 5 

2.  WHAT WAS THE EXPECTED OUTCOME OF THE INTERVENTION? ....................................... 6 

2.1 

2.2 

Description of the intervention and its objectives .......................................................... 6 

Point(s) of comparison ................................................................................................. 13 

3.  HOW HAS THE SITUATION EVOLVED OVER THE EVALUATION PERIOD? ....................... 15 

Current state of play .................................................................................................................. 15 

4. 
EVALUATION FINDINGS (ANALYTICAL PART) ....................................................................... 18 
4.1.  TO WHAT EXTENT WAS THE INTERVENTION SUCCESSFUL AND WHY? .......................... 18 
4.1.1. EFFECTIVENESS .............................................................................................................................. 18 
4.1.1.1. 

IS  PROVIDING  FINANCE  AT  SCALE  FOR  RELEVANT 

THE  MF 

INVESTMENTS ................................................................................................................................. 18 
4.1.1.2. 
ENVIRONMENTAL RESULTS AND PLANNED IMPACTS OF THE MF .......................... 25 
4.1.1.3. 
EFFECTIVENESS OF IMPLEMENTATION AT MEMBER STATE LEVEL ...................... 28 
LEVERAGE EFFECT OF MF ON ADDITIONAL PRIVATE CO-FINANCING .................. 32 
4.1.1.4. 
4.1.2. EFFICIENCY...................................................................................................................................... 34 
EFFICIENCY OF EU-LEVEL PROCESSES ........................................................................... 34 
4.1.2.1. 
EFFICIENCY OF NATIONAL-LEVEL PROCESSES ............................................................ 37 
4.1.2.2. 
4.1.2.3. 
COSTS AND BENEFITS ASSOCIATED WITH MF IMPLEMENTATION ......................... 41 
4.1.3. COHERENCE ..................................................................................................................................... 45 
4.2.  HOW DID THE EU INTERVENTION MAKE A DIFFERENCE AND TO WHOM? .................... 52 
4.3.  IS THE INTERVENTION STILL RELEVANT? .............................................................................. 55 
5.  WHAT ARE THE CONCLUSIONS AND LESSONS LEARNED? ................................................. 60 
5.1.  CONCLUSIONS ................................................................................................................................. 60 
5.2.  LESSONS LEARNED ........................................................................................................................ 63 
ANNEX I:   PROCEDURAL INFORMATION ........................................................................................... 66 
ANNEX II. METHODOLOGY AND ANALYTICAL MODELS USED ................................................... 69 

Mixed-methods analytical approach ......................................................................................... 69 

ANNEX III. EVALUATION MATRIX AND, WHERE RELEVANT, DETAILS ON ANSWERS 

TO THE EVALUATION QUESTIONS (BY CRITERION) ............................................................. 72 

Effectiveness ............................................................................................................................. 72 

Efficiency .................................................................................................................................. 75 

Relevance .................................................................................................................................. 79 

Coherence .................................................................................................................................. 81 

 
 
 
 
EU added value ......................................................................................................................... 84 

ANNEX IV. OVERVIEW OF BENEFITS AND COSTS AND TABLE ON SIMPLIFICATION 

AND BURDEN REDUCTION ........................................................................................................... 85 
ANNEX V. STAKEHOLDERS CONSULTATION - SYNOPSIS REPORT ............................................. 92 

 
 
 
 
 
Glossary 

Term or acronym 

Meaning or definition 

BMS 

EIB 

ETS 

GHG 

MF 

NPI 

PI 

RSB 

Beneficiary Member State(s) 

European Investment Bank 

Emissions Trading System 

Greenhouse Gas 

Modernisation Fund 

Non-Priority Investment 

Priority Investment 

Regulatory Scrutiny Board 

 
 
 
1. 

INTRODUCTION 

The  Modernisation  Fund  (hereafter  MF)  was  established  in  2021  through  the  2018 
revision  of  Directive  2003/87/EC  (1)  (hereafter  referred  to  as  “EU  ETS  Directive”)  to 
support the modernisation of energy systems and the improvement of energy efficiency 
in low-income Member States over 2020-2030. It aims to help the beneficiary Member 
States  (BMS)  achieve  their  climate  targets  and  the  objectives  of  the  European  Green 
Deal, in particular the EU Climate law (2) which sets out the climate neutrality objective 
by  2050  and  intermediate  targets  by  2030  and  2040.  The  MF  currently  supports  13 
beneficiary Member States, as Portugal, Greece and Slovenia were added to the original 
10 (3) through the 2023 revision of the EU ETS Directive (4).   

The  Commission  must  carry  out  a  review  of  the  MF  based  on  the  mandate  in  Article 
10d(11)  of  the  EU  ETS  Directive  (link)  and  Article  15  of  the  MF’s  Implementing 
Regulation  ((EU)  2020/1001),  hereafter  referred  to  as  “the  Fund’s  Implementing 
Regulation”). After four years of implementation, it is the appropriate time to conduct a 
first evaluation of the operating rules of the MF, also in view of the wider evaluation of 
the Emissions Trading System (ETS) Directive. This evaluation fulfils the Commission’s 
obligation to perform a review. Conducted at a relatively early stage since the creation of 
the MF (halfway through the MF’s lifetime of ten years, based on data for the first four 
and half years (5)), the evaluation’s focus is the operating rules of the MF. It covers the 
five compulsory criteria included in the Better Regulation Guidelines. More specifically, 
it assesses: 

•  Effectiveness: how successful the MF has been achieving its objective to support 
Member  States  with  a  GDP  per  capita  below  75%  of  the  EU  average  to  deploy 
investments that modernise energy systems and improve energy efficiency; 

•  Efficiency:  how  the  MF  resources  have  been  used  to  obtain  outputs  and  results 
and  whether  the  governance  process  and  operating  rules  of  the  MF  have  led  to 
efficient  decision-making  on 
the  efficient 
implementation of investments. This criterion considers a quantitative assessment 
of  actual  costs  and  benefits  and  potential  actions  for  simplification  and  burden 
reduction in the implementation of the MF; 

investment  proposals  and 

1 

Directive  (EU)  2018/410  of  the  European  Parliament  and  of  the  Council  of  14  March  2018  amending  Directive  2003/87/EC  to 

enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814. 

2

3

4

5

  Regulation  (EU)  2021/1119  of  the  European  Parliament  and  of  the  Council  of  30 June  2021  establishing  the  framework  for 
achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’). 

 Bulgaria, Czechia, Estonia, Croatia, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia. 

  Directive  (EU) 2023/959  of  the  European  Parliament  and  of  the  Council  of  10 May  2023  amending  Directive 2003/87/EC 
establishing a system for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 concerning 
the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading system. 

 For what concerns disbursement data. For data stemming from the Member States’ annual report (such as data on implementation of 
investments or on climate impact, only data up for the first four years, i.e. up to end 2024, was available at the time of writing). 

3 

 
 
 
•  Coherence:  how  the  different  elements  of  the  MF  (e.g.  the  distinction  between 
priority investments (PIs) and non-priority investments (NPIs)6, the delineation of 
PIs,  the  process  for  confirming  or  recommending  investments,  the  role  of 
beneficiary  Member  States  in  financing  and  monitoring  investments)  operate 
together  to  achieve  the  objectives  of  the  MF  (internal  coherence)  and  how  they 
operate in a coherent way with the EU’s policy objectives and other EU funding 
programmes; 

•  EU added value: how the results and impacts of the MF contribute to changes that 

are due to EU intervention; 

•  Relevance:  the  relationship  between  the  EU’s  current  and  future  needs,  any 
mismatch  between  the  MF’s  objectives  and  the  wider  EU  climate  policy  and 
goals, and how the activities and design of the MF suit the current needs of lower-
income Member states. 

Considering that halfway through the lifetime of the MF more information is available on 
procedures and inputs (i.e. budget execution) than on outputs and results, the evaluation 
will focus  on the design and governance of the  MF.  In particular, the  MF  being newly 
established  in  2021,  it  was  not  until  mid-2023  that  all  original  10  BMS  had  their  first 
investments confirmed. As of last reporting by BMS (end 2024 (7)), there were only two 
investments which had been fully completed. In addition, this evaluation will be followed 
by a final evaluation of the MF at the end of its lifetime, which is planned for 2030 under 
the EU ETS Directive. In line with Article 15(2) of the MF’s Implementing Regulation, 
that final evaluation will review the progresses towards achieving of the MF’s objectives. 

In  accordance  with  Article  10d(11)  of  the  EU  ETS  Directive  and  Article  15(1)  of  the 
MF’s  Implementing  Regulation,  the  present  evaluation  reviews:  (i)  the  areas  for  PI 
projects,  (ii)  the  process  of  confirmation  by  the  EIB  of  PIs;  (iii) the  assessment  by  the 
Investment  Committee  of  NPIs; (iv)  financing  and  monitoring  of  investments  by  the 
BMS; and (v) any relevant procedural aspects regarding the implementation of the  MF. 
The results of the evaluation will inform the impact assessment of the upcoming revision 
of  the  EU  ETS  Directive.  Its  findings  will  help  identify  relevant  policy  options  for 
consideration in the impact assessment and Commission proposal.     

1.1 Methodology applied 

This  evaluation  builds  on  multiple  sources.  It  is  informed  by  an  evaluation  report8 
(hereafter  referred  to  as  “the  support  study”)  developed  by  external  consultants  in  the 
framework of a contract with DG CLIMA which was concluded in December 2025 (See 
Annex  I).  The  evaluation  draws  on  several  resources  including  an  extensive  literature 
review and a comprehensive database (hereafter referred to as “the Modernisation Fund 

6

7

 See later in next section the explanation of both concepts. 
 The next Member States’ annual reports, including data for 2025, will be submitted to the Commission by 

30st April 2026. 

8 A. R. Ilisescu et al., Evaluation of the operating rules of the Modernisation Fund, Final Report, 

Publications Office of the European Union, December 2025 
https://data.europa.eu/doi/10.2834/5072291 

4 

 
 
database”)  which  was  developed  specifically  in  the  context  of  the  support  study.  The 
database  brings  together  1)  financial  data  provided  by  the  European  Investment  Bank 
(EIB) on MF-supported investments; 2) data extracted from the annual reports submitted 
by  each  BMS,  available  up  to  end  2024  and  3)  additional  data  provided  by  Member 
States on private and public co-financing.  

The  evaluation  is  further  informed  by  the  outcome  of  a  comprehensive  consultation 
strategy  (see  Annex  V  for  further  details)  involving  three  targeted  surveys  (one 
developed for BMS, one developed for end beneficiaries, and one for other organisations 
such as civil society and trade organisations) and 43 semi-structured interviews with the 
EIB,  all  BMS  (13)  and  the  three  non-beneficiary  Member  States  represented  in  the 
Investment  Committee of the  MF,  civil  society organisations (five), trade organisations 
(five), end beneficiaries (or scheme coordinators in the case of schemes) (10) and  other 
relevant Commission services (DG REFORM, DG COMP). Finally, a call for evidence 
without further public consultation gathered additional feedback from 44 respondents.   

1.2 Methodological robustness and Limitations 

The  evaluation  relies  on  a  well-defined  intervention  logic  that  lays  out  the  causal 
relations  between  the  different  inputs  and  expected  outputs,  results  and  impacts  of  the 
MF both in terms of its actual objectives and in terms of the functioning, governance and 
processes.  The  intervention  logic  provided  the  basis  for  defining  the  key  evaluation 
questions and sub-questions, judgement criteria and indicators that underpin the analysis. 
The robustness of the data used as a basis for the analysis, in particular the data compiled 
in  the MF  database  faces  several  limitations stemming from  inconsistencies in  the way 
financial flows and investment monitoring data are reported across Member States. In the 
absence of a harmonised methodology for reporting on several metrics, these differences 
limit comparability and reduce the reliability of aggregated figures.  

Time limitations: 

At the time when the evaluation was conducted (i.e. halfway through the MF’s lifetime) 
more  information  is  available  on  procedures  and  inputs  (i.e.  budget  execution)  than  on 
outputs  and  results,  findings  regarding  efficiency,  which  should  assess  the  relation 
between inputs and outputs are necessarily limited. The evaluation therefore focussed on 
the efficiency of the MF’s operating rules.  

Data limitations: 

Most  data  stemming  from  Members  States’  annual  reports,  including  financial  data 
(contracted amounts to end beneficiaries, amounts paid to beneficiaries) and Green Deal-
related  indicators  (greenhouse  gas  (GHG)  emissions,  energy  savings,  abatement  costs) 
lack  harmonised  definitions  serving  as  a  basis  for  calculation  and  reporting.  This  also 
applies  to  metrics  which  are  not  included  in  normal  MF  reporting  and  were  asked  to 
Member States specifically in the context of this evaluation (e.g. private and public co-
financing).  This  led  to  discrepancies  in  the  methodology  adopted  by  different  Member 
States  and  limits  comparability.  Wherever  possible,  data  discrepancies  were  manually 

5 

 
corrected by the contractor in dialogue with the EIB and based on direct feedback from 
the  Member  States  (for  instance  amounts  contracted  to  final  beneficiaries  for  two 
Member States).  

Some metrics are based on ex ante estimates provided by the Member States either at the 
moment of submitting investment proposals to the EIB (total investment  costs, planned 
support for the MF) or when reporting to the European Commission in the annual report 
(EU  Green  Deal-related  indicators  applied  to  investment  lifetime)  and  are  not  always 
subsequently  updated,  which  raises  the  question  of  their  reliability.  They  have  been 
included into this evaluation nonetheless, as they are the only source of data available for 
these metrics. 

A specific case in point for data limitations is the indicator on GHG emissions avoided/to 
be avoided through the  MF support. The figures for this metric  are taken from  the MF 
Annual Report, in which the Member States yearly must provide data on: 

1.  GHG emissions saved in t CO2 by 31 December of the year preceding report per 

investment; 

2.  GHG gas emissions saved in t CO2 expected cumulative amounts by the end of 

the investment lifetime per investment.  

The methodology for estimating the GHG emissions saved is not harmonised and there is 
no guidance in how the number should be estimated. In using the data for the evaluation, 
quality  checks  were  performed,  such  as  comparing  orders  of  magnitude  between 
projects’ GHG emissions reported. Where obvious discrepancies were found, these were, 
when possible, manually corrected in dialogue with the EIB and based on direct feedback 
from  the  Member  States. Nonetheless,  the  comparability  of  data  across  Member  States 
remains very limited. This has repercussions also for the abatement cost indicator, given 
that GHG emissions avoided is one component of how it is calculated. 

Where investments are spread across several areas, in most cases Member States did not 
quantify how the investment would break down across the different areas. The contractor 
of  the  support  study  together  with  the  EIB  therefore  had  to  estimate  how  to  split  these 
investments based on information included in the investment submission forms, follow-
up  clarification  questions,  and  informed  judgement.  Several  discrepancies  across  data 
sources  were  also  noted:  disbursement  data  and  total  investment  costs  provided  by  the 
EIB  and  reported  by  Member  States  in  annual  reports  were  not  always  consistent. 
Whenever an inconsistency was found, it was decided to rely on the data provided by the 
EIB as it is more comparable across Member  States and reflects the data at application 
stage that justified the disbursement in the first place. 

These different limitations call for analysing what additional indicators and data are required for 
conducting  an  informative evaluation  at  the  end  of  the  MF’s  lifetime (see in  particular  section 
5.2). 

2.  WHAT WAS THE EXPECTED OUTCOME OF THE INTERVENTION? 

2.1   Description of the intervention and its objectives 

Problems/needs the EU was trying to address and their underlying causes 

6 

 
The  creation  of  the  MF  was  mandated  by  the  European  Council,  which,  in  its  October 
2014 conclusions(9) on the 2030 climate and energy framework, agreed that a reserve of 
2%  of  the  EU  ETS  allowances  would  be  set  aside  between  2021  and  2030  to  support 
lower-income  Member  States  (with  GDP  per  capita  below  60%  of  the  EU  average  in 
2013(10))  in  improving  energy  efficiency  and  modernising  their  energy  system.  This 
attention given to lower-income Member States was endorsed as part of efforts to deliver 
on the increased target of 43% GHG emissions reduction in the EU ETS sector in a fair 
way. 

The  reasons  for  the  mandate  are  further  explained  in  the  impact  assessment  (11) 
accompanying  the  2015  Commission  proposal  for  amending  the  EU  ETS  Directive(12) 
(hereafter,  “2015  ETS  Impact  Assessment”).  More  specifically,  reaching  the  objectives 
of  the  2030  climate  and  energy  framework  require  significant  investments,  which  are 
higher  compared  to  the  GDP  for  lower-income  Member  States.  This  reflects  the 
relatively  higher  carbon  intensity  and  lower  energy  efficiency  of  their  economies  and 
more limited financial resources. 

Furthermore,  according  to  the  2015  ETS  Impact  Assessment  lower-income  Member 
States  face  general  and  financial  barriers  (less  liquid  local  financial  markets,  high  risk 
profile  and  limited  creditworthiness  of  several  key  actors)  to  mobilise  the  required 
investments  which  may  have  prevented  full  financing  by  the  market  and  limited  the 
potential to finance the needed investments without public support. Realising significant 
emission  reductions  in  lower-income  Member  States  was  seen  as  contributing  to  cost-
effective reductions from a European perspective. 

The  October  2014  European  Council  conclusions  mandated  several  distributional 
mechanisms  to  counterbalance  the  potential  effects  of  a  more  stringent  carbon  price 
signal resulting from the increased ambition of the EU ETS  on carbon-intensive lower-
income  Member  States.  These  included  the  creation  of  the  MF;  the  continuation  of 
conditional optional free allocation to the power sector(13) which benefit countries with a 
GDP per capita below 60% of the EU average ( i.e. a similar group to the MF14 minus 
Greece, Portugal and Slovenia) and the setting aside of allowances for auctioning for the 
purposes  of  solidarity,  growth  and  interconnections  within  the  Union  which  benefit 
countries with a GDP per capita below 90% of the EU average(15) (targeting 16 Member 
States, ie a similar group to the MF plus Spain, Cyprus and Malta). 

9

 European Council (23 and 24 October 2014 - EUCO 169/14), Conclusions. 

10

11

12

13

14

15

 This corresponds to 10 beneficiary Member States. The 2023 EU ETS revision also included as beneficiary Member States those 

with the GDP per capita below 75% of the EU average between 2016 and 2018, bringing their total number to 13. 

 Commission Staff Working Document (SWD(2015) 135 final) of 15 July 2015. 

 Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective 

emissions reductions and low-carbon investments (COM(2015) 337 final) of 15 July 2015. 

 Article 10c of the EU ETS Directive. 

 With the 2023 EU ETS Directive revision, the threshold to benefit from the MF has been increased to 75% of EU GDP average. 

 Article 10(2)(b) of the EU ETS Directive. 

7 

 
 
The MF complements the flexibility offered by Article 10c and 10(2)(b) of the EU ETS 
Directive on free allocation to the power sector for lower-income Member States. Most 
notably, Member States can choose to transfer part or the totality of allowances referred 
to in Article 10c and Article 10(2)(b) of the EU ETS directive to the MF. Six Member 
States  have  decided  to  do  so,  some  of  them  (most  notably  RO,  CZ  and  SK)  for 
substantial volumes of EU ETS allowances which considerably increase their allocation 
to the MF (see table 1). The motivation of these Member States for these transfers was 
linked to ensuring their ringfencing within the state budget for decarbonation purposes.  

Table 1: Transfers from Article 10(2)(b) and 10c of the EU ETS Directive to the MF 

Member 
State 

Number of EU 
ETS allowances 
stemming from 
distribution key in 
Annex IIb parts A 
and B (mn) 

Czechia 
Croatia 
Lithuania 
Hungary 
Romania 
Slovakia 
Total 

63 
12 
10 
29 
48 
24 
186 

Number of EU 
ETS allowances 
stemming from 
voluntary 
transfers from 
Article 10(2)b and 
10c (mn) 
129 
5 
7 
4 
144 
30 
319 

Total 
number of 
EU ETS 
allowances 
(mn) 

Share of 
voluntary 
transfers in 
total number 
of EU ETS 
allowances 

192 
17 
18 
33 
192 
54 
506 

67% 
29% 
39% 
12% 
75% 
56% 
63% 

The  MF  was  designed  to  address  specific  financial  barriers  faced  by  lower-income 
Member States in the energy sector. The 2015 ETS Impact Assessment identified barriers 
concerning the rehabilitation of district heating networks which suffer in these Member 
States from high heat losses, while investments are limited due to the difficult financial 
situation  of  the  district  heating  companies,  aggravated  by  falling  demand  as  users  may 
switch to other sources like individual boilers. For energy efficiency, too long pay-back 
time  make  investments  unattractive  even  if  they  generate  return.  Cash  constraints  and 
limited  creditworthiness  in  lower-income  groups  implied  that  loans  cannot  be  provided 
on  terms  agreeable  to  financial  institutions  without  public  intervention.  In  addition, 
projects  were  highly  fragmented  across  multiple  and  often  small  beneficiaries,  which 
could be mitigated through national schemes to help municipalities and other responsible 
public sector entities to pool investments. For power generation (including renewables), 
lower-income  Member  States  had  increasingly  obsolete  conventional  generation  fleets 
and  relative  underdevelopments  of  financial  markets  and  hence  possible  scarcity  of 
financiers.  

Expected achievements of creating the MF  

The  economic  impacts  of  creating  the  MF,  as  described  in  the  2015  ETS  Impact 
Assessment,  include triggering important  investments in  the beneficiary Member States 

8 

 
 
that contribute towards creating a strong European Energy Union with a forward-looking 
climate policy. Through investments in relevant areas to modernise the energy systems of 
the  beneficiary  Member  States,  including  deployment  of  renewable  energy,  energy 
efficiency  improvements,  storage  and  modernisation  of  energy  networks,  the  MF  was 
expected  to  contribute  not  only  towards  cost-effectively  reaching  the  2030  climate  and 
energy  objectives,  but  also  towards  diversifying  the  energy  mix,  improving  security  of 
supply and lowering import dependency. 

The  creation  of  the  MF  was  also  expected  to  trigger  positive  environmental  and  health 
benefits  for  BMS.  The  MF  would  contribute  to  lowering  GHG  emissions  in  the  BMS 
under  both  the  EU  ETS  (through  investments  to  modernise  the  power  sector)  and  the 
non-ETS  sectors  (through energy efficiency investments  in sectors such  as  buildings or 
transport). Additionally, lowering fossil fuel consumption would contribute to improving 
air  quality  leading  to  health  benefits  in  the  BMS  and  lower  costs  related  to  controlling 
emissions  of  air  pollution.  Since  the  MF  would  facilitate  energy  sector  modernisation 
investment  and  improve  energy  efficiency  in  the  BMS,  it  would  also  have  a  positive 
impact  on industrial  decarbonisation. The  final  impact  would depend on the  number of 
realised investments and the specific sectors these were implemented.  

Description of the intervention 

In a nutshell: the MF’s intervention logic (see also Figure 1) 

The  MF  provides  support  to  lower-income  Member  States  through  ETS  revenues 
generated from the auctioning of a set percentage of allowances from the EU ETS cap as 
well as voluntarily transferred additional EU ETS allowances, which are complemented 
by national public and private co-financing. Member States, the European Commission, 
and the EIB carry out key activities intended to ensure the selection and implementation 
of  investments  (outputs)  aligned  with  the  eligibility  criteria  for  PIs  and  NPIs.  The 
enabling  governance  and  implementation  framework  (covering  processes,  procedures, 
and  cooperation  arrangements)  facilitates  smooth  delivery  of  the  MF.  The  investments 
aim  to  generate  key  results,  such  as  increased  renewable  energy  capacity,  enhanced 
energy  savings,  and  improved  energy  networks,  ultimately  contributing  to  overarching 
impacts  including  avoided  CO₂  emissions,  reduced  fossil  fuel  imports  and  modernised 
energy systems.  

The  MF  features  pre-established  national  envelopes  of  EU  ETS  allowances  set  aside 
from the ETS cap (438 million allowances) set according to a key fixed in Annex to the 
EU ETS Directive. Six beneficiary Member States complemented their national envelope 
with  additional  allowances  voluntarily  transferred  to  the  MF  (in  total  320  million 
allowances16).  At  an  estimated  carbon  price  of  EUR  75  per  ton  of  carbon,  the  total 
amount available to the 13 beneficiary Member States is EUR 56.8 billion between 2020 
and  2030.  According  to  the  EU  ETS  Directive,  the  beneficiary  Member  States  are 

16

 Romania: 143.6 million; Czechia: 129.3 million; Slovakia: 30.1 million; Lithuania: 7.5 million; Croatia: 5.1 million; Hungary: 4 

million). 

9 

 
 
responsible  for  the  MF’s  implementation,  who  identify  the  investments  on  which  to 
spend  their  national  envelopes,  within  the  boundaries  set  by  the  MF’s  rules  and  in 
accordance  with  State  aid  rules.  Among  others,  State  aid  rules  ensure  that  the  aid  is 
necessary, appropriate and proportionate. In particular, State aid rules reduce the risk of 
overcompensation   by  verifying  that  that  public  funding   provided  to  the  projects  is 
limited to the minimum necessary for achieving their objectives. 

The  EU  ETS  Directive  distinguishes  between  PIs  and  NPIs.  Investments  in  generation 
and  use  of  energy  (electricity,  heating  and  cooling)  from  renewable  sources;  energy 
efficiency; energy storage and the modernisation of energy networks (including demand-
side  management,  district  heating  pipelines,  grids  for  electricity  transmission,  the 
increase of interconnections between Member States and infrastructure for zero-emission 
mobility);  support  for  low-income  households  to  address  energy  poverty;  and  a  just 
transition  in  carbon-dependent  regions  are  listed  in  the  EU  ETS  Directive  as  PIs. 
Following the 2023 revision of the EU ETS Directive, at least 80% of the MF resources 
must  be  used  for  PIs.  They  are  subject  to  a  simpler  approval  process,  including 
confirmation  from  the  EIB  that  the  activities  supported  fall  under  a  priority  area,  a 
verification of costs and State aid compliance check. 

BMS  also  have  the  possibility  to  support  investments  falling  outside  priority  areas  that 
modernise energy systems and bring GHG emission reductions. No more than 20% of the 
MF  resources  can  be  used  for  such  NPIs.  Like  PIs,  NPIs  are  also  subject  to  State  aid 
compliance and in addition aid intensity is limited to 70% of the relevant costs. NPIs are 
also  subject  to  a  stricter review process  by the EIB, involving  a technical  and financial 
due diligence and a more stringent approval process including a positive recommendation 
of the MF’s Investment Committee, at which next to the BMS, the Commission, the EIB 
and three non-beneficiary Member States are represented. 

Approval  by  the  Investment  Committee  is  therefore  only  needed  in  the  confirmation 
process  of  NPIs,  which  represent  only  6%  of  total  MF-support  volume.  Given  that  the 
vast  majority  of  investments  submitted  are  PIs,  decision-making  of  the  Investment 
Committee  acts  as  a  backstop  to  prevent  approval  of  investments,  which  would  not  be 
impactful in terms of the objectives of the MF. While the Investment Committee rarely 
rejects  investments,  the  constructive  discussions  within  this  forum  can  encourage 
Member  States  to  further  reflect  on  and  refine  their  submissions  before  formal 
consideration. 

Outside of the Investment Committee, the current system ensures that the most impactful 
projects  are selected through giving  predominance to  a certain  type of investments,  i.e. 
priority ones, as those have the highest impact in terms of GHG savings. In addition, all 
investments  supported  must  be  state-aid  compliant,  which  means  that,  by  nature,  they 
address market failures.  Finally, the EIB proceeds to a verification of investment costs, 
when this is not covered by the State aid assessment.  

The  governance  system  deliberately  leaves  important  room  for  discretion  to  Member 
States in implementing the MF, which is notably why the evaluation does not assess how 

10 

 
end-beneficiaries are selected. The MF does not select end beneficiaries, Member States 
do  (for  instance  through  running  national  calls  for  proposals  after  a  scheme  has  been 
approved  under  MF  for  instance).  This  is  done  according  to  national  procedures,  and 
subject to national auditing procedures. 

There is a diverse landscape of end-beneficiaries across Member States including, based 
on  the  replies  to  the  survey  conducted  for  the  evaluation,  mostly  companies  from  the 
energy / industry sector, public sector institutions and, to a smaller extent,  services  and 
research sectors. There are no classification or official groups of end-beneficiaries in the 
MF  governance  structure,  hence  making  a  structured  analysis  fully  covering  the  end 
beneficiaries and drawing conclusions is not possible. 

Member States can submit investments to the EIB all year round, and they are assessed 
by  the  EIB  within  fixed  deadlines.  The  Investment  Committee  meets  twice  a  year  and 
adopts recommendations on NPIs submitted by Member States. Disbursements from the 
MF  for  the  approved  investments  take  place  a  few  weeks  following  the  Investment 
Committee  meetings,  based  on  a  corresponding  decision  issued  by  the  European 
Commission. Member States then proceed with implementing the investments approved. 
This often involves calls for proposals, selecting projects, contracting end beneficiaries, 
transferring  funds  to  them  and  monitoring  project  implementation.  Audits  are  also  a 
responsibility of the Member States. Every year, Member States submit an annual report 
to  the  European  Commission  taking  stock  on  implementation,  including  as  regards 
results and impacts of investments.  

How are expected achievements assessed 

Member States report annually to the European Commission on investments financed by 
the MF. This  includes financial information about  each investment  supported, allowing 
to  track  implementation  on  the  ground  (such  as  the  amount  contracted  and  paid  out  to 
final  beneficiaries),  an  assessment  of  the  added  value  of  each  investment  supported  in 
terms  of  energy  efficiency  or  modernisation  of  the  energy  system  (the  energy  saved  in 
Megawatt  hour  (MWh),  the  GHG  emissions  saved  in  tCO2,  the  additional  renewable 
energy  capacity  installed  and  the  abatement  costs  in  EUR/tCO2)  and  additional 
information  about  the  implementation  of  investments  (milestones  achieved,  expected 
entry into operation, identified or expected delays). The Investment Committee adopts its 
own report every year, aggregating the findings from individual Member States’s reports. 

11 

 
Figure 1: Intervention logic of the Modernisation Fund 

12 

 
2.2 Point(s) of comparison  

As the MF was newly established with the 2018 revision of the EU ETS Directive, the 
main point of comparison to assess its implementation and expected impact relates to the 
counterfactual  situation  of  what  would  have  happened  in  its  absence,  in  relation  to  the 
needs that it aims to address. 

Initial investment needs and MF contribution to them 

The  2015  ETS  Impact  Assessment  quantifies  the  investment  needs  of  the  initial  ten 
beneficiary  Member  States  of  the  MF.  In  the  context  of  the  2030  climate  and  energy 
framework, these needs (excluding the transport sector) amount to EUR 28.6 billion per 
year for the decade 2021-2030. Out of this amount, “approximately € 8.4 billion per year 
is additional due to the 2030 climate and energy framework while the remaining amount 
reflects the need to  energy system modernisation to replace ageing infrastructure, even 
without ambitious climate and energy policies.”  

In  the  2025  ETS  Impact  Assessment,  the  expected  achievements  of  the  MF  were  not 
quantified, and can hence not serve as a quantified point of comparison. Nonetheless, the 
primary  objective  is  to  modernise  the  energy  system.  To  date,  several  investments 
aligning  with  this  objective  have  been  initiated  and  are  in  progress.  However,  it  is 
currently too early to assess their impact. 

When taking into account only the MF revenues stemming from a share of the ETS cap, 
as set aside for the MF by Article 10(1), paragraphs 3 and 4, of the EU ETS Directive, 
the MF provides 398 million allowances to the ten original MF beneficiaries (EUR 29.9 
billion over 2020-2030 at  EUR 75 per ton  of carbon) for relevant  investments  to  attain 
the  climate  and  energy  targets,  or  EUR  3.0  billion  annually.  This  represents  8%  of  the 
total  climate  and  energy  investments  needs  referred  to  in  the  2015  ETS  Impact 
Assessment or 27% of the additional need in the context of the 2030 climate and energy 
framework (17).  

When  adding  also  the  voluntary  transfers  of  EU  ETS  allowances  to  the  MF  from  six 
beneficiary  Member  States,  these  figures  are  much  higher.  Including  these  voluntary 
transfers, the MF provides an estimated EUR 53.8 billion (at EUR 75 per ton of carbon) 
for the period 2020-2030 to the ten original MF beneficiary Member States, or EUR 5.4 
billion per year, corresponding to 49% of the additional investment needs identified for 
the  10  original  beneficiary  Member  States  in  the  2015  Impact  Assessment.  Adding 
Greece,  Portugal  and  Slovenia  joining  later,  the  MF  provides  an  estimated  EUR  56.8 
billion for the period 2020-2030, or EUR 5.7 billion annually 

17

 Impact Assessment 2015 numbers corrected with the 2025 deflating factor to adjust for inflation. 

13 

 
 
 
It should be noted, however, that the estimated investment needs based on the 2015 ETS 
impact  assessment  do  not  fully  capture  the  additional  requirements  resulting  from 
subsequent legislative initiatives, notably the Fit for 55 package and REPowerEU, which 
have further increased investment needs towards 2030. Using model-based estimates (18) 
based  on  the  2040  climate  target  Impact  Assessment  (19),  which  take  into  account  the 
achievements of 55% GHG emission reduction by 2030 and the 2050 climate neutrality 
target, as well as an 85% domestic reduction of GHG emissions by 2040, the estimated 
investment  need  is  even  higher  than  the  initial  2015  Impact  Assessment.  The  total 
average  annual  investment  need  in  the  energy  system  for  the  13  BMS  between  2021-
2030 is estimated to be EUR 75 billion (rounded to the nearest EUR 5 billion) (20). The 
MF, including voluntary allowance transfers, covers 8% of the total investment needs for 
the 13 BMS needed based on the 2040 Impact Assessment.  

MF’s impact on the number of ETS allowances available to beneficiary Member States 

The MF is a solidarity mechanism that redistributes a certain share of the EU ETS cap to 
lower-income Member States ETS allowances  for auctioning. It de facto increases their 
auction share and their revenues from the EU ETS and as such improves their ability to 
invest in  low-carbon projects.  It  is  estimated that  the MF increases the total number of 
allowances  that  beneficiary  Member  States  receive  by  11%  (13%  for  the  original  10 
beneficiary Member States) (table 1). 

Table  1:  Number  of  EU  ETS  allowances  received  by  beneficiary  Member  States 
with and in the absence of the MF (Baseline = total EU ETS allowances available for 
auctioning) 

ETS allowances 
outside of MF 
(mn) [1] 

ETS allowances 
corresponding to 
MF (mn) [2] 

Total ETS 
allowances: 
[1] + [2] 

Baseline: Total ETS 
allowances (in the 
absence of MF) 

% Change 
between baseline 
and situation with 
MF  

Total MF 
beneficiaries 
Total non-MF 
beneficiaries 

2251.1 

3865.3 

438.0 

2693 

2417.7 

0 

3865.3 

4140.6 

+11% 

-7% 

The  MF  corresponds  to  a  total  of  438  million  allowances  (excluding  the  additional 
voluntary transfers by six beneficiary Member States). If this number of allowances was 
distributed  based  on  the  general  distribution  key  for  Member  States’  auction  volume 

18

19

20

 PRIMES’ model 85% scenario 

 European Commission, Staff Working Document, "Impact Assessment Accompanying the Document: Proposal for a Regulation of 
the  European  Parliament  and  of  the  Council  on  Establishing  the  Framework  for  Achieving  Climate  Neutrality  by  2040," 
{SWD(2021) 602 final}, (link) 

 (1) Energy system investment needs exclude all transport investment needs, (2) Investment needs in the residential and services 
sector include only thermal uses (heating and cooling) and renovations. They exclude investment in appliances, which have been 
reported in previous IAs but are not relevant for the MF, (3) Model-based estimates with risk of changing due to finetuning of 
PRIMES model (4) Figures in EUR are rounded to the nearest EUR 5 billion. 

14 

 
 
 
 
(aligned  with  the  number  of  verified  emissions  of  ETS  installations  in  each  country), 
beneficiary  Member  States  would  receive  161  million  allowances,  and  non-beneficiary 
Member  States  would  receive  277  million  allowances.  The  relative  gain  for  the 
beneficiary  Member  State  therefore  corresponds  to  277  million  allowances  to  the 
beneficiary  Member  States,  leading  to  an  increase  of  171%  of  the  amount  that  these 
would otherwise receive (see Table 2).  

The  MF  is  mobilising  resources  at  a  scale  far  above  recent  private  investment 
trends  in  beneficiary  Member  States.  Total  private  investment  in  climate  change 
mitigation across beneficiary Member States amounted to only EUR 12.6 billion in 2020, 
falling  to  EUR  10  billion  by  2023  (21).  In  electricity,  gas,  steam  and  air  conditioning, 
investment volumes dedicated to climate change mitigation declined sharply from EUR 
3.7  billion  in  2020  to  EUR  1.5  billion  in  2023  (-60%).  In  the  construction  sector, 
investments in climate change mitigation across the BMS declined from EUR 1.5 billion 
in  2020 to  EUR 1.3 billion in  2023.  Against this backdrop, the  MF  makes available to 
beneficiary Member States EUR 5.68 billion per year until 2030 on average, i.e. 110% of 
the  total  private  amount  spent  on  both  electricity,  gas,  steam  and  air  conditioning  and 
construction  in  beneficiary  Member  States  in  2020  (EUR  5.2  billion)  and  more  than 
twice the private amount spent in these sectors in 2023 (EUR 2.8 billion). This suggests 
that it is filling a financing gap to deliver investments useful for meeting the EU’s 2030 
climate and energy targets that the private sector would not be able to deliver.   

3.  HOW HAS THE SITUATION EVOLVED OVER THE EVALUATION PERIOD? 

3.1.  Current state of play 

Economic and policy developments since the start of MF 

When  the  MF  started  operating  in  2021,  the  EU’s  economy  was  recovering  from  the 
COVID-2019  pandemic.  The  robust  rebound  in  economic  activity  brought  the  EU 
economy  back  to  its  pre-pandemic  output  level  in  the  third  quarter  of  2021,  and 
economic  growth  prospects  were  optimistic  for  the  following  years.  However,  the 
resilience of the EU economy was subject to a major shock as a consequence of Russia’s 
war of aggression against Ukraine which exacerbated the supply-side disruptions that had 
started  to  push  up  global  commodity  prices  in  2021.  The  EU  avoided  recession  by  a 
margin, but the economic momentum slowed down significantly at the end of 2022. 

The EU experienced a severe energy and a cost-of-living crisis in 2022, with long-lasting 
ripple  effects.  The  increasing  price  of  energy  resulted  in  exceptionally  high  inflation 
figures  in  autumn  2022,  subsequently  declining  but  remaining  still  high.  Furthermore, 
credit conditions tightened importantly in 2022 and 2023. This crisis has underlined the 
need for reliable and clean energy sources and prompted the adoption of the REPowerEU 
plan, with the objective to end the EU's dependence on Russian fossil fuels and to speed 

21

 Eurostat, Investments in climate change mitigation by NACE Rev. 2 activity (link) 

15 

 
 
up  the  clean  energy  transition.  REPowerEU’s  main  pillars  of  boosting  energy  savings 
and efficiency and accelerating the roll-out of renewable energy are fully aligned with the 
investments promoted by the MF. 

State of play of MF implementation 

At this early stage of MF implementation, the report analyses  MF implementation state 
of  play  and  efficiency  through  a  number  of  input  indicators  such  as:  the  rate  of 
disbursement to total fund amount per Member State, the year-on-year evolution of the 
number  of  investments  approved  per  Member  State,  the  rate  of  contracting  and  of 
payments to end beneficiaries and the year-on-year evolution of amounts paid-out to end 
beneficiaries  per  Member  State.  Some  impacts  have  been  attained,  as  reported  in  the 
annual reports by the end of 2024 and analysed in section 4.1.1.2 (GHG emissions saved, 
energy savings, additional renewable capacity installed), but they are admittedly modest 
given  the  early  stage  of  implementation,  especially  at  the  time  Member  States  last 
reported on these (by the end of 2024). 

Of the estimated EUR 56.8 billion of MF support, EUR 18.9 billion (33%) have been, as 
of mid-2025, disbursed to 12 beneficiary Member States for 194 approved investments, 
with  important  discrepancies  across  Member  States  (43%  in  RO,  8%  in  EL).  An 
additional EUR 2113.7 billion (42%) have been indicated by beneficiary Member States 
as earmarked for already  approved schemes.  When implemented, these investments are 
expected to represent EUR 71.7 billion of total investment costs. 

Of the EUR 18.9 billion disbursed to beneficiary Member States, 94% fell under the PI 
category. The approved PIs were mostly dedicated to energy efficiency (37%), renewable 
energy (32%) and energy storage and networks’ modernisation (27%), with only a small 
amount dedicated to support for low-income households and no investment falling under 
the just transition category (see Figure 2). 

Figure 2: Amounts  disbursed to  BMS by priority area, share of total  PIs amounts 
disbursed (2021 - mid-2025) 

16 

 
 
15 NPIs representing EUR 1.1 billion of support disbursed to beneficiary Member States 
(6% of total amounts disbursed) had been approved by mid-2025 in four Member States 
(RO, CZ, PL and LT). Six were devoted to the development of gas infrastructure, five to 
energy  efficiency  investments  involving  a  switch  to  natural  gas,  three  to  renewable 
heating  (now  categorized  as  PI  following  the  2023  EU  ETS  revision)  and  one  to 
electrification of an LNG terminal.    

On  the  ground,  there  were,  as  of  Member  States  last  reporting  (by  end  2024),  two 
investments that were fully completed (1%), while 44% were under construction, 29% in 
tendering  and  26%  had  not  yet  started  yet.  By  end  of  2024,  58%  of  the  amounts 
disbursed to Member States had been contracted and 11% paid out to final beneficiaries, 
both figures sharply increasing compared to 2023.    

Evolution of the MF legal framework 

The 2023 revision of the EU ETS Directive brought about a number of changes such as 
an  increase  in  the  total  number  of  allowances  dedicated  to  the  MF  (+192  million 
allowances), its extension to three new beneficiaries (EL, PT and SI) and an expansion of 
the activities falling under the PIs area (e.g. to renewable heating and cooling and support 
to low-income households to address energy poverty). Its scope has been aligned with the 
most recent EU climate objectives by requiring that investments are compatible with the 
objectives of the European Climate Law (22). In that context, investments supporting gas 
were excluded from support, with some exceptions, especially with regards to allowances 
assigned to the MF prior to the reform (investments involving gas must fulfil a number of 
conditions  such  as  qualifying  as  environmentally  sustainable  under  the  EU  Taxonomy 
and are subject to a sunset clause) and voluntarily transferred allowances. In addition, the 
minimum share of PIs was increased to 80% from 70%, and compliance with the ‘Do No 
Significant Harm’ criteria of the EU Taxonomy (23) was introduced. 

The Implementing Regulation (EU) 2020/1001 laying down rules for the operation of the 
MF (hereafter referred to  as “the  MF Implementing  Regulation”) (24) was  subsequently 
amended25  to  implement  the  changes  introduced  by  the  revised  EU  ETS  Directive  and 
improve  the  governance  of  the  MF.  The  amended  MF  Implementing  Regulation  laid 
down a distinction between several categories of revenues from the MF in the procedures 
for  submitting  and  assessing  investment  proposals  in  order  to  implement  provisions  of 
the  EU  ETS  Directive  specifying  which  revenues  from  the  MF  can  be  used  for 

22

23

24

25

  Regulation  (EU)  2021/1119  of  the  European  Parliament  and  of  the  Council  of  30 June  2021  establishing  the  framework  for 

achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’). 

   Criteria set out in Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the 

establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088. 

   Commission  Implementing  Regulation  (EU)  2020/1001  of  9  July  2020  laying  down  detailed  rules  for  the  application  of 
Directive  2003/87/EC  of  the  European  Parliament  and  of  the  Council  as  regards  the  operation  of  the  Modernisation  Fund 
supporting investments to modernise the energy systems and to improve energy efficiency of certain Member States. 

  Commission  Implementing  Regulation  (EU)  2023/2606  of  22  November  2023  amending  Implementing  Regulation  (EU) 
2020/1001  laying  down  detailed  rules  for  the  application  of  Directive  2003/87/EC  of  the  European  Parliament  and  of  the 
Council  as  regards  the  operation  of  the  Modernisation  Fund  supporting  investments  to  modernise  the  energy  systems  and  to 
improve energy efficiency of certain Member States 

17 

 
 
investments  involving  gaseous  fossil  fuels  or  which  revenues  are  to  be  used  in 
accordance  with  the  ‘do  no  significant  harm’  criteria  of  the  EU  Taxonomy.  It  also 
updated  rules  governing  the  operation  of  the  Investment  Committee  to  reflect  the 
extended membership of the Committee that includes representatives of new beneficiary 
Member States. 

Additionally,  the  amended  MF  Implementing  Regulation  introduced  provisions  to 
enhance  sound  financial  management  of  the  MF,  such  as  the  obligation  for  large-scale 
projects  (for  which  MF  support  exceeds  EUR  70  million)  to  be  subject  to  a  staggered 
disbursement  and  for  all  schemes  and  large-scale  projects  to  provide  information  on 
implementation when requesting subsequent disbursement. It also limited the duration of 
schemes to  five years to  ensure that they continue to  meet  the objectives of the  MF.  It 
relaxed  the  rules  applicable  to  discontinued  investments,  with  investments  no  longer 
deemed  discontinued  if  no  support  has  been  provided  to  end  beneficiaries  within  two 
years  from  the  disbursement  of  Funds  by  the  EIB  to  the  beneficiary  Member  States. 
Instead, it is now sufficient for the Member States to enter a binding legal commitments 
with the final beneficiaries within that deadline.  

It also introduced measures to increase transparency, with the obligation for investment 
pipelines, but also large-scale schemes (for which MF support exceeds EUR 100 million) 
and  large-scale  projects  to  be  subject  to  stakeholder  consultation.  It  also  made  the 
provision of information on the GHG emission reduction potential and related abatement 
costs mandatory for all investments upon submission. 

Finally, to strengthen the coherence of investment financed with the MF with the Union 
climate and energy objectives, Member States’ annual reports should explain the relation 
between planned investments and the National Energy and Climate Plans (NECPs) under 
Regulation  (EU)  2018/1999  (26).  The  relevant  stakeholders  should  be  consulted  on  the 
draft overview of the planned investments.  

4.  EVALUATION FINDINGS (ANALYTICAL PART) 

4.1.  To what extent was the intervention successful and why?  

4.1.1.  EFFECTIVENESS 

4.1.1.1.THE  MF 

IS  PROVIDING  FINANCE  AT  SCALE  FOR  RELEVANT 

INVESTMENTS 

In  the  2025  ETS  Impact  Assessment,  the  expected  achievements  of  the  MF  were  not 
quantified, and can hence not serve as a quantified point of comparison. Nonetheless, the 
primary  objective  is  to  modernise  the  energy  system.  To  date,  several  investments 
aligning with this objective have been initiated and are in progress.  

26

  Regulation  (EU)  2018/1999  of  the  European  Parliament  and  of  the  Council  of  11  December  2018  on  the  Governance  of  the 
Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament 
and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the 
European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) 
No 525/2013 of the European Parliament and of the Council (OJ L 328 21.12.2018, p. 1). 

18 

 
 
By mid-2025, the MF is supporting 194 individual investments across 12 beneficiary 
Member States, representing EUR 18.9 billion disbursed to them. Czechia, Romania, 
and Poland, which are the three largest beneficiaries to the MF (representing 73% of the 
total  MF  envelope),  account  for  over  86%  (EUR  16.3  billion)  of  all  disbursements  to 
beneficiary Member States by the EIB. In addition to the amounts disbursed to the BMS, 
EUR  23.7  billion  in  MF  contribution  have  been  signalled  by  the  BMS  to  the  EIB  as 
indicatively  earmarked  for  already  confirmed/recommended  schemes  or  large-scale 
projects (planned MF amount). These investments correspond to a total estimated cost of 
EUR 71.7 billion. 

At  mid-2025,  33%  of  the  total  MF  envelope  (27)  of  EUR  56.8  billion  had  been 
disbursed  to  BMS  by  the  EIB.  Czechia  (40%),  Romania  (43%),  Croatia  (33%)  and 
Poland (33%) had the highest  rate.  In contrast,  Bulgaria (11%), Greece (EUR 8%) and 
Portugal  (0%)  had  received  limited  or  no  transfers  from  the  EIB,  reflecting  the  low 
number  of  investments  confirmed  in  these  countries.  These  patterns  reflect  both 
differences in institutional preparedness and the number of years of effective engagement 
with the MF – with Greece and Portugal having only joined the MF in 2024. The limited 
uptake  by  new  beneficiary  Member  States  can  partly  be  explained  by  the  fact  that  the 
allowances  which  provide  the  resources  for  the  national  envelopes  under  the  MF  are 
auctioned in equal annual volumes from 2021 to 2030 in accordance with the Auctioning 
Regulation;  Member  States  can  only  request  the  amounts  which  are  available  on  their 
accounts.  

Figure 3: Share of disbursed amount by the EIB relative to Member State total MF 
envelope (total EU-wide envelope = EUR 56.8 billion) (2021-mid-2025) 

Note: Total envelope displayed at the end of each bar.  
Source: Modernisation Fund database – EIB data  

27 The auctioned EU ETS allowances that form the national Modernisation Fund envelopes (a percentage of 
the  EU ETS cap allocated among BMS according to a  fixed key specified in Annex to the EU ETS 
Directive) complemented by voluntary transfers of EU ETS allowances to the Modernisation Fund in 
six beneficiary Member States (Czechia, Croatia, Lithuania, Hungary, Romania, Slovakia). 

19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75%  of  the  total  MF  envelope  has  been  either  disbursed  or  signalled  by  BMS  as 
indicatively earmarked to already approved schemes or large projects, again with a 
large  disparity  across  BMS.  These  figures  take  into  account  the  amounts  that  Member 
States signal as intended to constitute future tranches of a given scheme when submitting 
the first tranche. Based on these (non-binding) indications, Czechia had fully earmarked 
its  envelope  and  Poland  84%  of  it,  indicating  a  long-standing  strategy  for  how  to  use 
their MF envelope. At the other end of the spectrum, Greece and Latvia had earmarked 
respectively 14% and 18% of their envelope. Member States may however still decide to 
redirect the earmarked (indicative) amounts to other investments and use them for other 
purposes  than  initially  intended,  subject  to  approval  of  the  corresponding  investment 
proposals.  In  that  respect,  the  MF  offers  a  flexible  governance  framework  allowing 
Member States to have a dynamic management of their MF envelope and to adapt future 
MF  implementation  depending  on  the  success  of  already  approved  investments  and 
evolving  needs.  Such  redirection  of  funds  previously  indicated  as  earmarked  does  not 
require  any  specific  process,  not  even  informing  the  EIB  (28).  The  Member  State  just 
needs to submit a new investment proposal aimed at a different activity than previously 
indicated.  

Figure 4 Share of planned support from MF relative to Member State total MF 
envelope (total EU-wide envelope = EUR 56.8 billion) (2021- mid-2025) 

Note: Total envelope displayed at the end of each bar.  
Source: Modernisation Fund database - EIB data 

The yearly evolution of approved investments shows steady activity since the MF’s 
inception. 25 investments were approved in 2021 in eight beneficiary Member States, a 
number which doubled to 52 in 2022 across seven BMS. In 2023, the pace slowed to 39 
approved investments across seven BMS. This may suggest a consolidation phase when 

28

  The process differs when a Member State wishes to redirect part of an investment that has already been disbursed to it by the 
EIB:  in  that  case,  the Member  State needs to  declare the investment discontinued  to the  Commission  so  that it can  reuse the 
liberated funds for another MF-supported investment. This however does not require any approval by the Commission or EIB 
(beyond confirmation of the investment for which the Member States wishes to use the liberated funds).   

20 

 
 
 
 
BMS  might  have  focused  on  implementing  previously  approved  investments.  Activity 
peaked  in  2024  with  55  investments  approved  across  11  BMS,  and,  by  mid-2025,  23 
further  investments  had  already  been  approved  in  9  BMS  (Figure  5).  The  evolution  of 
corresponding  financial  flows  to  Member  States  shows  a  somewhat  different  picture, 
with  a  peak  taking  place  in  2022  (EUR  6.2  billion)  and  still  substantial  but  lower 
disbursements  in  2023  (EUR  4.9  billion),  2024  (EUR  3.3  billion).  In  the  first  cycle  of 
2025  alone,  EUR  2.5  billion  were  disbursed.  The  decorrelation  between  the  peak  in 
number of investments approved (2024) and the amounts disbursed (2022) suggests that 
Member States have tended to favour smaller projects/schemes in later years.  

The  MF  implementation  shows  progressive  geographical  expansion  while  early 
starters  maintain  steady  activity.  Poland,  Czechia,  Slovakia,  Hungary,  Lithuania, 
Estonia, Romania and Croatia were early starters with  investments already in 2021 and 
2022 (29). 2023 saw the first investment approved in Latvia and Bulgaria. At the end of 
2023,  i.e.  three  years  into  Fund  implementation,  all  ten  historical  beneficiary  Member 
States had some investments approved under the MF. Historical beneficiaries continued 
to be active in subsequent years, with two of the three Member States having joined the 
MF following the 2023 EU ETS revision having their first investments approved in 2024 
(Slovenia) and the first investment cycle of 2025 (Greece) (figure 5). 

Figure 5 Number of confirmed/recommended investments by Member State, per year (2021- mid-
2025) 

Note: Subsequent disbursements are computed in the year when the original investment they pertain to was 
approved. 
Source: Modernisation fund database – EIB data 

The  MF  consistently  gears  investments  towards  priority  areas,  which  represented 
94%  of  funds  disbursed  to  Member  States  at  mid-2025,  well  above the  regulatory 
minimum  of  80%30.  By  mid-2025,  179  individual  PIs  (including  39  subsequent 

29

30

 In 2022, except for Estonia. 

 Or 90% for revenues covered by Article 10(1) fourth paragraph of the EU ETS Directive. 

21 

 
 
 
 
disbursements)  had  been  confirmed  across  12  Member  States  and  15  individual  NPIs 
(including  one  subsequent  disbursement)  have  been  recommended.  The  EIB  had 
disbursed  EUR  17.8  billion  to  Member  States  for  PIs  (94%  of  all  disbursements),  well 
above  the  regulatory  minimum  of  80%.  By  contrast,  NPIs  accounted  for  just  EUR  1.1 
billion,  or  6%  of  all  disbursements.  Furthermore,  all  NPIs  approved  in  Poland  (two 
schemes  and  one  subsequent  disbursement)  and  one  in  Czechia  concern  renewable 
heating  (in  buildings  and  district  heating),  which  would  have  qualified  as  PI  had  they 
been  adopted  after  the  2023  revision  of  the  EU  ETS  Directive.  Deducting  these 
investments (totalling EUR 456 million disbursed by the EIB), the number of NPIs drops 
to 12 and to a total disbursed amount by the EIB of EUR 665 million, or 4% of the total 
amount disbursed by the EIB by mid-2025.  

NPI  approvals  decreased  over  the  years,  and  are  concentrated  in  four  BMS.  The 
number  of  approved  NPIs  and  corresponding  MF  support  amounts  peaked  in  2022,  to 
substantially  decrease  in  2023  and  2024.  In  the  first  cycle  of  2025,  none  was 
recommended  for  funding  (graphs  6  and  7).  All  12  BMS  that  were  implementing  MF-
supported  investments  as  of  mid-2025  were  implementing  PIs.  NPIs,  by  contrast,  were 
limited  to  four  BMS:  Czechia  (six  investments  recommended,  EUR  420  million 
disbursed  by  the  EIB),  Romania  (six  investments,  EUR  529.5  million  disbursed  by  the 
EIB), Poland (two individual investments and one subsequent disbursement, EUR 155.5 
million disbursed by the EIB), and Lithuania (one investment, EUR 6 million disbursed 
by the EIB).  

Figure  6:  Evolution  of  the  number  of  approved  investments  by  type  of  proposal 
(2021 - mid-2025)  

Note: Subsequent disbursements are computed in the year when the original investment they pertain to was 
approved. 

22 

 
 
 
 
 
Figure 7: Evolution of amounts disbursed to BMS by type of proposal (2021-mid 
2025) 

Source: Modernisation Fund database - EIB data 
Note: In 2022, a subsequent disbursement was recommended for an investment initially 
recommended in 2021. The corresponding amount is computed in 2021. 

PIs have a twice higher approval rate than NPIs and are more likely to be approved 
upon the first submission. 63% of submitted PI proposals were confirmed (179 out of 
283),  and  only  32%  of  NPI  proposals  (15  out  of  47).  PIs  also  require  far  fewer 
resubmissions  until  they  get  approved:  58%  of  PI  proposals  (103  of  the  179)  were 
returned for revisions and had to be resubmitted to get approved, compared with 200% of 
the  recommended  NPIs  (30  out  of  15).  This  higher  likelihood  of  rejection  or 
postponement for revision reflects the more demanding approval process faced by NPIs 
(technical  and  financial  due  diligence  by  the  EIB  and  a  decision  by  the  Investment 
Committee) as opposed to as streamlined confirmation process of PIs.  

Member States prioritise PIs to secure faster fund absorption and because they are 
more  aligned  with  national  priorities.  During  interviews  conducted  for  the  Support 
Study, several Member States highlighted that PI approval is faster and simpler, making 
them the preferred route. Croatia and Estonia stressed that PIs enabled quick absorption 
of  funds  and  higher  aid  intensity  (31).  Slovakia  pointed  to  practical  staffing  reasons  for 
focusing  on  PIs,  while  Poland  expressed  that  the  heavy  administrative  burden  of  NPIs 
(complex  calculations,  EIB  due  diligence)  pushed  them  toward  focussing  on  PIs. 
Hungary,  Latvia,  Croatia,  Estonia  and  Lithuania  noted  that  PIs  match  domestic  energy 
needs and policy priorities, avoiding the need for NPIs.  

Rejection  of  PIs  stem  from  issues  related  to  regulatory  compliance  or  compliance 
with  the  MF’s  own  rules.  In  some  cases,  Member  States  failed  to  demonstrate 
compliance with  State aid  rules  which led to the rejection of proposals. This  highlights 
the  need  for  Member  States  to  anticipate  the  state  aid  clearance  process.  Proposals  are 

31

 Under Article 10(d)(6) of the EU ETS Directive, MF aid intensity is capped at 70% for NPIs, with the remaining 30% having to be 

provided by private legal entities. For PIs, the maximum MF aid intensity depends on the applicable state aid rules.   

23 

 
 
 
also returned when they are not compliant with the MF’s own rules, but there is a lack of 
data  as  regards  the  respective  prevalence  of  these  two  causes.  In  this  case,  reasons 
specific  to  PIs  include  failure  of  a  proposal  to  fall  under  priority  status  or  lack  of 
information  to  demonstrate  its  priority  status,  whereas  for  NPIs,  a  typical  reason  for 
rejection or withdrawal is insufficiently demonstrated GHG reductions. This is illustrated 
by two NPIs from Romania dedicated to gas transmission infrastructure which could not 
be  endorsed  because  GHG  reductions  could  not  be  proven.  According  to  Czechia, 
demonstrating  the  eligibility  of  NPI  proposals  is  difficult,  especially  for  complex  or 
innovative projects. This has led to withdrawing investment proposals related to schemes 
where the emissions intensity could not be clearly demonstrated. 

Future investments planned by Member States are predominantly  PIs.  Beneficiary 
Member States’ 2024 annual reports indicate intention to submit 74 PIs versus 10 NPIs. 
By  planned  MF  support  volume,  PIs  would  amount  to  EUR  11.31  billion  compared  to 
EUR 1.87 billion for NPIs – about 86% versus 14% of the total planned MF support in 
the pipeline. This composition confirms that the MF is strongly geared towards priority 
areas.  

21%  of  priority  and  73%  of  NPIs  involve  gas,  with  high  concentration  in  a  few 
Member  States  and  a  somewhat  declining  trend.  Between  2021  and  mid-2025,  49 
proposals  involving  support  to  gas  were  approved  (25%  of  all  confirmed  proposals), 
including  38  PIs  and  11  NPIs.  The  corresponding  MF  support  represented  EUR  4.37 
billion  (24%  of  total  amounts  disbursed  to  beneficiary  Member  States),  covering  EUR 
3.7 billion for PIs and EUR 649 million for NPIs. These were highly concentrated in five 
Member  States,  with  Czechia,  Poland  and  Romania  (7  proposals)  accounting  for  the 
largest  amounts.  The  number  of  approved  investments  involving  gas  peaked  at  16  in 
2022,  to  decrease  slightly  to  13  and  14  in  2023  and  2024  respectively.  In  the  first 
investment  cycle of 2025, the number dropped to 0. The revision of the  ETS  Directive 
restricting  the  conditions  for  supporting  investments  involving  gas  (See  Section  3)  and 
which  entered  into  force  in  2024,  may  have  influenced  this  recent  decline  in  the  trend. 
Furthermore, in most cases for Czechia and Romania, such investments were supported 
from  the  revenues  generated  from  allowances  voluntarily  transferred  to  the  MF,  which 
are subject to less strict rules regarding this type of investments. 

Investments  involving  gas  supported  energy-efficiency  improvements  through  fuel 
switch  from  coal  (all  PIs  and  almost  half  of  the  NPIs  supporting  gas)  and  gas 
infrastructure  (just  over  half  of  NPIs  supporting  gas).  PIs  supporting  gas  could  be 
approved as they bring energy efficiency improvements, typically through coal-to-gas or 
lignite-to-gas switch in high efficiency combined heat and power generation. The sectors 
targeted  are  primarily  energy  generation  (20  PI,  for  EUR  1.4  billion  disbursed  by  the 
EIB), followed by those concerning industry (5 PI, for EUR 150.2 million disbursed by 
the EIB), buildings (2 PI, for EUR 23.6 million disbursed by the EIB) and waste (2 PI, 
for EUR 661.2 million disbursed by the EIB). NPIs involving natural gas targeted energy 
efficiency  improvements,  typically  through  a  switch  from  coal-  or  lignite-to-gas,  but 
without  highly  efficient  heat  and  power  generation  in  Czechia  (5  NPIs)  and  the 

24 

 
deployment  of  gas-fired  power  generation  facilities  (as  part  of  the  phase  out  of  the 
Oltenia coal  power plant) and  gas transmission pipelines needed to  supply gas  to  these 
facilities (6 NPIs) in Romania. 

Figure 8 Evolution of confirmed investments involving fossil fuel by BMS, per year 
(2021 – mid-2025) 

Source: Modernisation Fund database - EIB data 

Note: subsequent disbursements are computed in the year when the original investment they pertain to was 
approved. 

4.1.1.2.ENVIRONMENTAL RESULTS AND PLANNED IMPACTS OF THE MF 

Lack  of  a  harmonised  reporting  methodology  limits  the  quality  of  data  related  to 
environmental results and impacts of the MF. Member States’ annual reports include 
indicators  related  to  GHG  emission  savings,  abatement  costs,  energy  savings  and 
installed  renewable  capacity  thanks  to  the  MF,  by  end  of  the  year  preceding  reporting 
and over investments’ lifetime. The figures included are based on the declaration of the 
Member States, which are developed in the absence of a harmonised methodology. The 
available data of this subsection should therefore be interpreted with caution. 

Over their lifetime, MF-supported investments are expected to generate substantial 
transformative  climate  benefits  compared  to  the  baseline.  The  2024  annual  reports 
indicate  estimations  of  1.15  billion  MWh  of  cumulative  energy  savings  over  the  MF’s 
lifetime, 837 MtCO₂eq in terms of avoided GHG emissions, and the addition of 25 GW 
of  renewable  capacity  across  beneficiary  Member  States.  In  relative  terms,  this  would 
correspond  to  around  34%  of  the  total  installed  renewable  capacity  baseline  of  all 
beneficiary  Member  States  in  2020  (73.7  GW  (32))  and  a  yearly  average  representing 
28%  of  the  installed  renewable  capacity  between  2020  and  2024  (118.3  GW)  (33).  On 

32 Eurostat, Air emissions accounts by NACE Rev. 2 activity 
33 Ibid. 

25 

 
 
 
GHG emission reductions, the MF would generate an  annual  average of  approximately 
84.8 MtCO₂eq  (34), over the lifetime of the ongoing  investments, which  corresponds  to 
about  32%  of  total  emissions  of  the  BMS  electricity,  gas,  steam  and  air-conditioning 
sector in 2020 (264.7 million tonnes (35)) and 31% of the annual average GHG emissions 
reduction in the electricity, gas, steam and air conditioning sector over 2020-2023 (270 
MtCO2eq)  (36).  Czechia,  Romania,  and  Poland  alone  account  for  the  majority  of  these 
gains (37): Czechia is  expected to  contribute over 12.7 GW of new renewable capacity, 
followed  by  Romania  (4.1  GW)  and  Poland  (3.4  GW).  This  concentration  differs  from 
baseline dynamics, where Poland, Portugal, and Hungary were the main contributors to 
renewable energy source (RES) growth between 2020 and 2024. 

in 

line  with  the  relatively  early  stage  of 
Early  results  remain  modest, 
implementation and  reporting gaps. According to  Member States’ annual  reports, by 
end of 2024, investments supported by the MF had already achieved 5.15 million MWh 
of energy savings (0.4% of the 1.15 billion planned) and 2.55 MtCO₂eq (0.3% of the 837 
MtCO2eq  planned)  abated,  alongside  the  installation  of  778  MW  (3.1%  of  the  25  GW 
planned)  of  renewable  capacity.  The  modesty  of  these  results  compared  to  lifetime 
projections can be explained by the fact that, by end of 2024, only 18% of the total MF 
envelope has been contracted out to final beneficiaries and only 3.6% paid out to them. 
At the same date, only two supported investments had been completed, and projects were 
predominantly still under construction  while many schemes  were  still in  the process  of 
selecting projects.  

The  reported  project  abatement  costs  vary  significantly  across  Member  States.  In 
the absence of harmonised methodology for calculating GHG emissions reductions, 
it is difficult to analyse the reasons. In the annual reports, BMS report average lifetime 
abatement costs for each project, calculated as the total investment cost per project over 
the  expected  cumulative  GHG  emission  reduction  by  the  investment’s  end  of  life. 
Drawing  the  unweighted  average  of  the  projects’  abatement  costs  results  in  significant 
differences between BMS, as shown in the support study. This unweighted average of the 
abatement  costs  is  influenced  by  the  share  of  certain  small  investments  with  high 
abatement  costs  in  the  overall  country  portfolio.  These  artificially  inflate  the  average 
abatement cost of MF investments.  

Whereas  the  support  study  presents  the  unweighted  average,  the  numbers  presented  in 
Figure  9  shows  the  weighted  average  per  BMS,  calculated  as  the  total  investment  cost 
over  the  cumulative  GHG  emissions  saved  by  the  end  of  the  lifetime  of  the  supported 
projects. This gives a more comparable picture across BMS.  

Furthermore,  in  most  cases,  the  MF  aims  to  cover  the  elements  of  the  total  investment 
costs related to the funding gap, in accordance with the applicable State aid procedures. 

34 Annual reports. 
35 Eurostat, Air emissions accounts by NACE Rev. 2 activity 
36 Eurostat, Air emissions accounts by NACE Rev. 2 activity 
37 Annual reports. 

26 

 
 
The  abatement  costs  calculated  based  solely  on  the  total  planned  support  from  the  MF 
hence provides a more accurate representation of this indicator in relation to the amounts 
expected to be disbursed and the overall impact of the MF. In Figure 9 the total planned 
MF support over the cumulative GHG saved per BMS is represented in the orange bars. 

Figure  9  Total  investment  costs  and  planned  support  from  MF  over  cumulative 
GHG emissions saved by end of life, weighted average (EUR/tCO2) 

Note: 9 (4 in PL, 4 in LT, 1 in RO) outliers were removed for having an abatement cost above 10,000 
€/tCO2.  

In  the  absence  of  a  harmonised  methodology,  it  is  not  possible  to  fully  explain  the 
noticeable variation in the average abatement costs across BMS in Figure 9 due to lack of 
comparable data. The abatement costs, both between investments and Member States, are 
also not fully comparable given the different nature of investments: some invest more in 
renewables, others in  energy efficiency, others in grid modernisation with more limited 
effect on greenhouse gas emission reductions , and technology costs also differ between 
countries. 

Analysing  the  BMS  2024  Annual  Report,  some  explanations  for  the  difference  in 
between Member States could be understood. For Poland, several large-scale schemes in 
grid  and  fuel  infrastructure  modernise  the  energy  system.  Moreover,  the  planned  MF 
support  for  these  large-scale  schemes  is  significantly  lower  than  the  total  investment 
costs,  leading  to  the noticeable difference between the blue and orange bars. Similarly, 
Lithuania  has  several  projects  in  renovation  of  buildings  as  part  of  energy  efficiency 
where  the  majority  of  investment  are  not  from  the  MF,  leading  to  the  significant 
difference between abatement costs based on total investment costs and MF contribution.  

27 

 
 
Bulgaria  currently  has  five  investments,  of  which  four  smaller  (three  below  EUR  37 
million,  one  EUR  150  million)  and  one  significantly  larger  investment  of  EUR  757 
million  in  grid  capacity  for  enabling  4000  MW  renewable  energy  capacity.  This  large 
investment, with a significantly lower abatement cost (EUR 6 per ton CO2) drags down 
the Bulgarian average.  

In  Estonia,  two  investments  in  energy  efficiency  programmes  in  public  transport  and 
buildings  see  low  expected  GHG  emission  reduction,  partly  due  to  the  nature  of  GHG 
emission reduction of this kind of investments. As with Poland and Lithuania, they also 
have significantly higher total investments than planned MF support.  

It should be noted that comparing MF’s abatement costs and the EU ETS price is a less 
suitable metric to assess the efficiency of the MF for a number of reasons. Firstly, some 
projects  (e.g.  grid  upgrades)  enable  future  decarbonisation  but  may  have  little  direct 
GHG  abatement  estimates,  thus  depending  on  how  the  estimate  is  made  a  low  or  high 
cost  per  unit  of  GHG  abatement.  Secondly,  the  MF  partly  serves  to  bridge  the  delta 
between the carbon price signal and the costs of investments in low-carbon technologies. 
The  MF  abatement  costs,  expressed  as  investment  cost  per  ton  abated,  typically 
exceeding the price of carbon is therefore natural. Thirdly, the MF has broader goals than 
solely  achieving  cheapest  emission  reduction.  It  is  designed  to  modernise  energy 
systems, improve energy efficiency and support lower-income Member States’ transition, 
as explained in section 2 of this report.  

4.1.1.3.EFFECTIVENESS AT MEMBER STATE LEVEL 

Effectiveness  of  funding  vis-à-vis  the  local  needs  is  ensured  by  the  MF  design, 
according  to  which  at  least  80%  of  investments  supported  must  be  chosen  within 
the  list  of  priority  areas,  specifically  defined  in  the  EU  ETS  Directive.  More 
specifically,  this  concerns  investments  in  renewables  deployment  and  use,  energy 
efficiency, grids, support to low-income households. Section 4.3 (Is the intervention still 
relevant?)  explains  how  these  intervention  fields  are  relevant  to  the  MF  beneficiary 
Member  States,  given  their  specific  needs.  Furthermore,  within  this  pre-defined  list  of 
activities, Member States choose the mix of investments that they wish to be supported 
by  the  MF,  based  on  their  own  analysis  of  the  most  pressing  national  and  local  needs, 
internal decision-making processes and public consultations.  

Implementation of investments on the ground is taking place, with a sharp increase 
in its pace in 2024. By end 2024, 55% of the amount disbursed by the EIB to BMS had 
been  pledged  through  a  legal  commitment  to  end  beneficiaries  (EUR  10.4  billion  (38)) 
and 11% (EUR 2 billion) paid out to them (figures 10 and 11). This shows that Member 

38 Bulgaria’s reported contracted amount has been capped to EUR 196.57 million, corresponding to the disbursed amount by the EIB 

to Bulgaria.  

28 

 
 
  
 
States  have  taken  concrete  steps  to  implement  investments  on  the  ground,  and  in  line 
with  the  normal  implementation  cycle  of  projects,  financial  flows  to  beneficiaries  take 
place  at  a  more  advanced  stage  of  the  implementation.  Both  contracted  amounts  and 
disbursements to final beneficiaries have increased steeply in 2024: an additional EUR 5 
billion  (+  96%)  has  been  contracted  and  EUR  1.3  billion  (+185%)  disbursed  to  end 
beneficiaries.  This  trend shows that investments are progressively  entering construction 
and delivery phases. 

The  pace  of  implementation  at  national  level  is  uneven.  Bulgaria,  Lithuania  and 
Romania  were  the  most  advanced  in  implementing  their  approved  investment,  having 
contracted  to  final  beneficiaries  respectively  100%  (EUR  196.57  million),  74%  (EUR 
249.5 million) and 69% (EUR 4.3 billion) of the amount disbursed  to them by the EIB. 
At  the  other  end  of  the  spectrum,  Latvia,  Slovenia  and  Greece  had  not  contracted  any 
amount.  As  regards  disbursement  to  end  beneficiaries,  Czechia,  Lithuania  and  Estonia 
were the countries that had paid out the highest shares by end of 2024 – respectively 26% 
(EUR 1.5 billion), 13% (EUR 44.6 million) and 11% (EUR 26 million) of the amounts 
disbursed  to  them  by  the  EIB.  By  contrast,  Romania  (2%),  Slovakia  (4%)  Poland  and 
Croatia (both 5%) had paid out relatively low amounts of the support disbursed to them 
by the EIB (figures 10 and 11). These differences may be partly explained by differing 
performance,  but  also  by  different  rules  governing  implementation  or  country  specific 
contexts. For Bulgaria, for example, the 100% commitment rate can be explained by the 
fact  that the five investments ongoing  at  the  end of 2024  are all projects, not  schemes, 
implemented  by  public  entities.  Regarding  payments,  some  Member  States  apply  pre-
financing while others only pay out upon completion of the investment. 

Figure  10  Disbursement  amounts  to  final  beneficiaries  over  disbursed  amount  by 
EIB, per BMS (2021-2024) 

Source: Modernisation Fund database - 2024 Annual reports  

29 

 
 
 
Figure 11 Contracted amounts to final beneficiaries over disbursed amount by EIB, 
per BMS (2021-2024) 

Source: Modernisation Fund database - 2024 Annual reports  

Implementation of approved investments at national  level  takes place over several 
years. There is a natural time lag between disbursements from the EIB  and the start of 
investment  implementation  on  the  ground:  once  investments  are  confirmed,  Member 
States  have  to  first  select  final  beneficiaries  (a  process  that  can  be  time  consuming 
especially  for  schemes  where  calls  for  proposals  are  systematically  run)  and  enter  into 
contractual arrangements with them, and only afterwards start disbursing money to them, 
according  to  national  implementation  rules.  When  delays  occur,  they  are  explained 
according to  stakeholders by (i) weak capacity and complex procedures  (administrative 
requirements, staffing shortages, and weak prioritisation of MF (39), delays in permitting 
and procurement, late calls for proposals (40), delayed permitting and coordination (41)), 
(ii)  the  integration  with  broader  ory  ory  or  EU  processes  (e.g.,  regulatory  consultation 
cycles, approval of investments, streamlining with state budget) causing long lead times 
before projects break ground (42), (iii) uneven pipeline maturity (43), and (iv) political and 
context-related factors (e.g., government instability, economic disruptions) (44). 

45%  of  investments  approved  by  end-2024  are  under  construction  or  completed, 
and  55%  in  early  implementation  phases.  According  to  data  from  2024  Member 
States’ annual reports, only two (1%) approved investments have been completed, while 
44%  are  under  construction  and  29%  are  in  tendering.  A  further  26%  have  not  yet 
started. For 23 investments approved in the first investment cycle of 2025, information is 
not  yet  available.  Czechia  stands  out  with  25  investments  at  advanced  or  final  stages, 
with  Croatia  and  Hungary  also  showing  strong  progress.  By  contrast,  Poland  and 

39 RES Croatia. 
40 Slovak Association of Renewable Energy (SAPI) and FoE Slovakia. 
41 Romania. 
42 Latvia, Croatia, Estonia. 
43 Slovenia, Bankwatch, EREF, Hungary. 
44 Bulgaria, Estonia, Slovakia. 

30 

 
 
 
Romania have fewer projects near completion, and Lithuania and Bulgaria remain largely 
in early phases.  

Monitoring  frameworks  of  investments  are  in  place  across  most  beneficiary 
Member States and national audits have been initiated or completed in six of them. 
All  ten  historical  MF  beneficiary  Member  States  plus  Slovenia  have  put  in  place 
structured approaches, with regular progress reports. In contrast, Greece and Portugal are 
still setting up or formalising their monitoring systems, reflecting the early stage of MF 
implementation in those Member States. Six Member States reported having conducted 
or  initiated  national  audits  of  MF  operations  according  to  the  Member  State  survey 
conducted in the context of the Support Study. Only one is planning to make the results 
publicly  accessible.  Based  on  the  interviews  conducted  for  the  Support  Study,  Czechia 
and  Hungary  seem  to  be  the  most  advanced,  with  several  audits  already  finalised. 
However, this was not reported in their 2024 Member State annual report. Other Member 
States  are  still  in  the  process  of  developing  formalised  audit  systems  (more  details  are 
available in the Support Study).  

Member  States  are  adopting  solutions  to  address  slow  or  lacking  implementation. 
National authorities primarily support beneficiaries in overcoming hurdles through direct 
coordination, targeted assistance, and exploring  alternative solutions.  Where difficulties 
persist,  investments  are  declared  discontinued  and  corresponding  funds  reallocated  to 
other  investments,  ensuring  continuity  of  implementation.  81%  of  the  beneficiaries 
surveyed  for  the  Support  Study  expressed  confidence  that  their  projects  would  fully 
achieve their objectives. 

Discontinuation of investments under the MF are rare, with low volumes impacted. 
Between 2021 and mid-2025, eight investments (4% of the 194 supported investments), 
representing EUR 191.4 million (1% of the EUR 18.9 billion disbursed to BMS in that 
period) were reported as discontinued across five Member States. As provided for by the 
MF Implementing Regulation, the liberated funds were reallocated to other investments. 
Bulgaria  (EUR  95.7  million)  and  Hungary  (EUR  45.7  billion)  registered  the  largest 
discontinued  amounts,  while  Czechia,  Slovakia  and  Lithuania  reported  smaller  ones 
(between EUR 10 and 20 million). The marginal occurrence of discontinued investments 
and  low  volumes  involved  suggest  stability  in  MF  implementation.  With  the  2024 
revision  of  the  MF  Implementing  Regulation,  legal  deadlines  that  Member  States  must 
respect  to  avoid  an  investment  being  discontinued  have  been  relaxed  (See  Section  3, 
Evolution  of  the  MF  legal  framework),  allowing  for  more  flexibility  in  managing  MF 
investments when delays occur. 

Two  thirds  of  end  beneficiaries  report  compliance  with  MF  visibility  rules  and 
Member States provide guidance to them. Most beneficiary Member States have put in 
place communication requirements, complemented by practical support directed towards 
end beneficiaries. This is confirmed by the end beneficiary survey: 86% of respondents 
declared receiving clear national guidance about visibility obligations, while 13% did not 
know  about  them.  Furthermore,  67%  of  beneficiaries  surveyed  confirmed  that  they 

31 

 
 
display the label “co-funded by the MF, EU ETS”, while only 14% reported not doing so 
and  19%  stated  they  did  not  know.  Beneficiaries  typically  use  a  broad  set  of 
communication tools. The most commonly used are plaques at project sites and dedicated 
references on websites, followed by social media activity, press releases, and municipal 
communication channels.  

4.1.1.4.LEVERAGE EFFECT OF MF ON ADDITIONAL PRIVATE CO-FINANCING 

Available  data  on  private  co-financing  is  subject  to  limitations.  Private-cofinancing 
amounts  are  not  tracked  as  part  of  mandatory  MF  reporting.  Related  data  has  been 
requested  to  Member  States  for  this  evaluation,  and  Member  States  have  resorted  to 
practices  (actual  or  estimated  amounts,  calculation  method)  differing  markedly  across 
Member  States  (see  Support  Study  for  more  details),  hampering  viability  and 
comparability. 

Using  the  figures  supplied  by  national  authorities,  the  amount  of  private  co-
financing  remains  limited.  This  is  consistent  with  the  fact  that  private  co-financing  is 
not  a  requirement  under  the  MF.  Subject  to  State  aid  rules,  aid  intensity  can  be  up  to 
100% for PIs (70% for non-priority ones). An MF aid intensity of 100% is for instance 
the  norm  for  investments  dedicated  to  network  modernisation,  considering  that  related 
operators  typically  are  in  a  situation  of  natural  monopoly.  Private  co-financing  to  MF-
supported investment would amount to EUR 5.5 billion, but that amount is importantly 
underestimated as a number of Member States have not provided estimates for the entire 
lifetime of investments, but amounts pledged through a legal commitment as of the first 
quarter  of  2025.  Romania  and  Lithuania  report  the  highest  amounts,  with  EUR  2.23 
billion  and  EUR  1.13  billion  respectively,  followed  by  Poland  (EUR  890  million), 
Czechia  (EUR  731  million),  and  Bulgaria  (EUR  436  billion).  Smaller  amounts  were 
reported in Slovakia (EUR 122.6 million), Croatia (EUR 45.6 million) and Latvia (EUR 
2.2  million).  In  Estonia,  the  MF  is  fully  channelled  through  two  multiannual  schemes 
targeting public buildings and public transport. As a result, all co-financing comes from 
state or municipal budgets rather than private actors.  

The levels of private co-financing involved in MF investments are in line with State 
aid  rules.  All  investments  must  be  state-aid  compliant,  which  means  that  they  must 
address market failures and not crowd out private investments. When this is not covered 
by the State aid assessment (when the investment represents no aid), the EIB proceeds to 
a  verification  of  costs  to  avoid  over-spending.  NPIs  are  subject  to  a  full-fledge  due 
diligence by the EIB, and subject to a vote in the Investment Committee of the  MF. In 
addition, the EU ETS Directive requires NPIs to be supported by a minimum of 30% of 
co-financing stemming from private legal entities.45 

45

 Article 10d(6), 

32 

 
 
Figure  12  Private  co-financing  amounts  (billion  EUR)  reported  by  BMS  (2021  - 
mid-2025) 

Source: Member States’ self-reported data on private co-financing – only BMS reporting private co-
financing are represented 

Most MF resources are spent through grants, but some Member States resorted to 
financial  instruments  to  increase  the  catalytic  potential  of  the  MF.  By  default, 
Member  States  use  MF  resources  as  non-repayable  grants.  For  certain  types  of 
investments  however,  MF  resources  are  sometimes  used  as  financial  instruments.  In 
Czechia, commercial banks provide long-term financing for schemes dedicated to energy 
efficiency in residential buildings, with MF covering 50% and private loans covering the 
remaining  50%  (46).  Poland  also  reported  experimenting  diverse  financial  instruments 
such as loans, equity, and ESCO financing (47), rather than relying solely on grants while 
pointing  to  the  limited  maturity  of  national  financial  markets.  These  practices  suggest 
that  the  MF  can  trigger  innovative  financing  mechanisms  when  national  authorities 
design  schemes  to  attract  private  capital.  However,  these  specific  implementation 
modalities  (e.g. grant, partial  grant,  loan, financial  guarantees)  are  not  specifically 
tracked in the MF reporting system and it is difficult to provide a complete overview of 
their use and results achieved. 

in 

reequired 

to  consider 

its recommendation 

The  MF  design  does  not  consider  financial  instruments  as  a  specific  point  of 
attention for the MF. There is no target governing the use of such instruments. The EIB 
is  only 
suggestions 
including 
regarding appropriate  financial instruments.  Instruments  such  as  loans,  guarantees,  and 
equity  often  offer  scalability  benefits  over  grants,  as  they  encourage  financial 
sector 
discipline, leveraging of additional resources, 
investment. However,  depending  on  financing  conditions  in  a  given  Member  State  and 
market  readiness,  grants  can  also  unlock  important  levels  of  private  investments.  This 
may  be particularly  the  case  in  lower-income  Member  States  which benefit from  the 
MF. Furthermore,  the  nature  of  some  activities  supported  (i.e.  grids,  networks  which 
can benefit from  100%  State  aid  intensity)  does  not  allow  for  other  types  of  financing 
than grants.  

stimulate  private 

and 

can 

 Interview with Czechia conducted in the context of the Support Study. 

46
47  ESCO  financing  refers  to  an  Energy  Service  Company  model  in  which  energy-efficiency  or  decarbonisation  investments  are 
financed  and  implemented  by  an  ESCO  and  repaid  through  the  verified  energy  savings.  In  Poland,  this  instrument  is  still 
nascent,  but  its  inclusion  alongside  grants,  loans,  and  equity  illustrates  the  authorities’  effort  to  diversify  funding  tools  and 
mobilise private investment beyond traditional grants. 

33 

 
 
 
 
Poland is the beneficiary Member State which resorts most extensively to financial 
instruments.  The  choice  of  such  instruments  is  motivated  by  the  analysis  of  the  most 
optimal  financial  conditions  for  each  sector  or  technology  type  taking  into  account  the 
maximum aid intensity allowed by State aid rules and the need to ensure synergies under 
different  support  programmes.  On  this  last  point,  Poland  reported  that  the  design  of 
instruments developed under Cohesion Policy was often reproduced in the context of the 
MF  so  that  funding  conditions  are  equally  appealing  and  these  different  support 
programmes  complement  rather  than  compete  with  each  other.  The  MF  taking  over 
subsidy schemes designed under Cohesion Policy can also ensure continuity of funding 
over time. In other cases, the decision to resort to financing instruments resulted from the 
specific  procedure  of  programming  under  MF,  involving  public  consultation.  Financial 
instruments  are  often  used  for  mature  technologies  such  as  renewables,  where 
technologies  that  are  CAPEX  intensive  such  as  geothermal  or  specific  sectors  such  as 
public buildings typically still need grants. 

Poland estimates that the benefits of financial instruments outweigh the cons but an 
evaluation of their impacts is not yet available. As most of Poland’s envelope has been 
earmarked to already approved schemes, financial instruments enable to provide support 
to  more  projects  than  by  only  resorting  to  grants.  In  addition,  this  constitutes  a 
sustainable  way  of  supporting  the  modernisation  of  the  energy  system  as  support 
provided in the form of loans goes back to the national authorities. In addition, financial 
instruments  tend  to  increase  project  maturity  as  promoters  have  to  share  risks  with  the 
subsidy  granting  authority  by  providing  a  share  of  funding  from  their  own  resources, 
However, financial instruments are not always easy to put in place as the market has to 
be  mature  enough  to  share  the  risks.  They  are  also  more  challenging  to  manage 
administratively. Poland is currently conducting an audit of the  results of different types 
of support under the MF. 

4.1.2.  EFFICIENCY 

Since the report can at this time mostly only provide data regarding inputs in terms 
of  the  intervention,  findings  regarding  the  efficiency  of  the  intervention  are 
necessarily  limited.  For  this  reason,  this  section  mainly  analyses  the  efficiency  of  the 
implementation processes at EU and national level, and the related costs. The possibility 
to analyse the relation between inputs and outputs will only materialise over time.  

4.1.2.1.EFFICIENCY OF EU-LEVEL PROCESSES 

The  process  of  confirming  PIs  is  streamlined  and  light.  According  to  the  MF 
Implementing Regulation, PI proposals are confirmed or returned by the EIB within 28 
days (4 weeks) of submission if submitted on the last possible day of an investment cycle 
(see Figure 13). Beyond State aid compliance checks performed by the EIB with support 
of  the  Commission,  the  confirmation  process  mostly  involves  checking  that  the 
investment is in line with the MF’s objective, falls under one of the priority areas listed 
by the EU ETS Directive, that the Member State has enough ETS allowances to finance 
it  and  has  demonstrated  how  the  investment  will  respect  the  Do  No  Significant  Harm 
criteria of the EU Taxonomy (where applicable).  

34 

 
 
 
 
The  light  nature  of  the  PI  approval  process  is  confirmed  by  Member  States’ 
perception. 92% of beneficiary Member States assess the process for confirming PIs as 
either  adequate  (38%),  or  very  adequate  (54%).  In  addition,  five  Member  States 
explicitly mentioned that the timelines for approval of investments are appropriate. Two 
Member States mentioned that delays have taken place due to internal issues, not because 
of MF-related procedures. In the interviews conducted, many Member States noted that 
timelines are not restrictive, and that the process of preparing and  applying is relatively 
easy. Regulatory deadlines for approving investments are respected. One Member State 
and  one  company  commented  that  more  flexibility  for  amending  already  approved 
schemes without the need for formal EU-level approval would increase efficiency.  

Approval process is facilitated by constructive engagement of the EIB and Member 
States.  All  Member  States  positively  assessed  their  dialogue  with  the  EIB,  rating  it  as 
either “constructive” or “very constructive”. This collaboration is widely seen as helpful, 
smooth,  constructive  and  effective.  Member  States  receive  technical  guidance  which 
helps them enhance proposal quality or get feedback on the likelihood of a proposal to be 
approved. Consultations are seen as key for submitting a successful proposal, helping to 
save time and resources for both the EIB and Member States. The process has improved 
over  time,  with  there  now  being  more  opportunity  to  ask  questions  or  have  informal 
discussions before proposal submission. Occasions to engage also include seminars held 
back-to-back  with  Investment  Committee  meetings,  which  serve  to  exchange  best 
practices  and  provide  guidance  on  specific  issues.  Finally,  guidance  documents 
developed by the EIB and available on the MF website are regarded as helpful and 92% 
of Member States use them when preparing and submitting investment proposals. 

In line with MF rules, the process for approving a NPI is more complex and takes 
twice and a half as long as approving a PI. If a Member State submits a NPI proposal 
on  the  last  possible  day  of  an  investment  cycle,  it  will  be  subject  to  an  Investment 
Committee recommendation 70 days later (48) (see Figure 13). The longer approval time 
for  NPIs  is  explained  by  their  a  priori  lower  climate  ambition,  which  requires  further 
reassurances that the investments will contribute to the MF objectives. In addition to the 
elements  required  for  PIs,  the  NPI  approval  process  includes  a  technical  and  financial 
due diligence and assessment of the expected GHG emission reductions by the EIB. The 
investments must also be subject to a positive recommendation by the MF’s Investment 
Committee, at which sit three non-beneficiary Member States.  

48 

Articles 6 and 7 of the MF Implementing Regulation.  

35 

 
 
 
 
 
 
Figure 13 General timeline for proposal submission 

Based on MF Implementing Regulation (EU) 2020/1001 

The  process  for  confirming  NPIs  is  generally  perceived  as  adequate  and  time 
consuming,  with  the  additional  burden  generally  seen  as  justified.  Six  beneficiary 
Member  States,  including  three  out  of  the  four  who  are  currently  implementing  NPIs 
consider  it  adequate.  Only  one  BMS  believes  it  is  not  adequate.  Three  out  of  four 
Member  States  that  have  applied  for  NPIs  estimate  that  administrative  efforts  for 
applying to NPIs are at least 30% higher than for PIs, while the fourth estimates that they 
are more than 10-20% higher. Three noted that this additional burden was primarily due 
to  extensive  due  diligence  requirements  and  challenges  in  classifying  certain  projects, 
particularly  advanced  biofuels.  One  beneficiary  Member  State  pointed  to  a  lack  of 
flexibility  and  that  EIB’s  requirements  are  excessive.  Three  respondents  also  assessed 
that  the  additional  burden  was  at  least  partly  justified,  and  two  assessed  that  it  had 
sometimes deterred them from submitting NPIs.  

The approval process may benefit from clearer guidance on the delineation between 
priority  and  NPIs.  Four  Member  States  pointed  to  insufficient  guidance  forMember 
States  to  make  more  robust  decisions  on  borderline  cases  between  PIs  and  NPIs,  or 
borderline cases between NPI and non-compliance, and areas which are not covered by 
the  EIB  assessment  guidance  document.  The  Member  State  survey  responses  equally 
point  to  the  fact  that  issuing  guidance  for  NPI  investments  and  the  accompanying 
annexes  (including  feasibility  study  and  CBA  (Latvia,  Romania),  and  especially 
borderline  cases  would  alleviate  procedural  complexity  and  support  a  more  efficient 
implementation of NPI investments. 

23%  of  beneficiary  Member  States  would  favour  rolling  calls  or  more  frequent 
disbursement cycles (three to four per year instead of two). According to the three BMS 
concerned,  the  biannual  schedule  of  the  Investment  Committee  does  not  allow  for 
sufficient flexibility to meet the investment needs in time.  

An  overwhelming  majority  of  decisions  concerning  NPIs  are  taken  by  consensus. 
Investment  Committee  procedures  enable  timely  decision-making  even  when 
consensus  cannot  be  reached,  with  safeguards  embedded  in  the  voting  rules.  Two 

36 

 
 
thirds (10 out of 15) NPI proposals to date were approved by consensus (49). In six cases, 
the proposal  was approved as submitted by the  BMS (without  modification) and in  the 
remaining  four  cases,  the  approval  concerned  a  modified  investment  compared  to  the 
proposal (reduced financing amount, limited to what is needed to achieve the objectives 
of  the  MF).  Although  the  Investment  Committee’s  rules  of  procedure  set  out  that  the 
Investment Committee shall act by consensus as far as possible, they allow decision by 
vote in case of lack of consensus on any NPI proposal (50). The threshold for approving 
an investment varies depending on whether the EIB endorses a proposal: simple majority 
is sufficient when the EIB recommendation is followed, but a majority of two thirds of 
all Investment Committee members is required to depart from the EIB recommendation. 
There  have  been  five  instances  (three  proposals  from  Czechia,  two  from  Romania)  in 
which consensus could not be found even though the EIB had recommended financing a 
proposal.  In  that  case,  the  Investment  Committee  member  that  voted  against  (a  non-
BMS,  Sweden)  (51)  was  outvoted  and  the  proposal  was  adopted.  However,  there  were 
four  failed  attempts  to  bypass  an  EIB  recommendation:  the  EIB  recommended  only 
partial  financing  of  four  NPI  proposals  submitted  by  Romania.  When  put  to  a  vote  on 
their  full  financing,  these  proposals  failed  to  gather  the  two-third  majority  needed  to 
bypass the EIB recommendation. They were subsequently approved by consensus when 
considered  for  partial  financing,  in  line  with  the  EIB  recommendation.  All  these 
proposals focused on natural gas infrastructure (52). 

Beneficiary  and  non-beneficiary  Members  States  are  generally  appreciative  of  the 
Investment Committee’s structure and processes. In the interviews, they describe the 
Investment  Committee  as  efficient,  collaborative  and  functional.  Its  format  allows  for 
cross-country  dialogue  and  exchange  of  best  practices.  This  helps  Member  States  with 
improving coordination and the quality of their proposals. Two non-beneficiary Member 
States  stated  that  the  Investment  Committee  is  well-managed,  and  where  there  are 
occasional disagreements, solutions are typically found through constructive discussions 
and negotiation. Only one beneficiary and one non-beneficiary Member States expressed 
reservations regarding the Investment Committee proceedings. The beneficiary Member 
State  commented  that  its  structure  reinforces  a  conservative  approval  culture  that  may 
limit responsiveness to national innovation needs, particularly for emerging technologies, 
while the non-beneficiary Member State commented that voting rules should allow non-
beneficiary  Member  States  to  veto  an  investment  and  that  non-beneficiary  Member 
States should also have more opportunities to influence PIs. 

4.1.2.2.EFFICIENCY OF NATIONAL-LEVEL PROCESSES 

Most  beneficiary  Member  States  have  put  in  place  stable  implementation 
structures, with no “one-size-fits-all” way of running the MF. Most countries involve 

49 Investment Committee Meeting Minutes. 
50 Rules of procedure of the Investment Committee: https://www.modernisationfund.eu/wp-content/uploads/2021/07/rop-mf-ic.pdf 
51 Another non-BMS, the Netherlands, abstained. Sweden objected to these proposals due to reservations on natural gas investments 

both from climate and financial sustainability perspectives. 

52 Source – IC meeting minutes. 

37 

 
 
multiple ministries  in  the proposal  selection process  to  ensure broad  representation  and 
policy  coherence.  National  institutional  arrangements  in  seven  of  the  “historical”  MF 
beneficiary  Member  States  involve  both  ministries  (with  most  often  the  Climate, 
Environment or Energy Ministries in the lead) and dedicated environmental agencies or 
state funds in charge of managing the MF. The ministries are largely responsible for the 
policy  setting  and  strategic  direction  of  the  MF  as  per  their  national  needs,  and  the 
agencies/funds  run  the  day-to-day  operations  ranging  from  submitting  applications  to 
implementation  and  monitoring.  In  the  remaining  three  historical  beneficiary  Member 
States,  ministries  are  wholly  responsible  for  managing  the  MF.  Processes  for  selecting 
MF  priorities  differ  across  Member  States  but  they  often  include  interministerial 
consultations, public consultations, and final approval by national authorities.  The three 
Member States having joined the MF in 2024 are still building their institutional setups. 

End  beneficiaries  are  broadly  satisfied  with  national  implementation,  with  a 
majority rating different national processes positively. Almost two thirds have highly 
rated  responsiveness  of  national  administrations  (63%  rated  them  as  either  efficient  or 
very  efficient),  guidance  provision  (62%)  as  well  as  the  process  of  project  selection 
(64%).  At  the  lower  end  of  the  spectrum,  the  approval  process  (53)  was  only  seen 
positively  by  a  short  majority  (51%  of  end  beneficiaries  rated  it  as  effective  or  very 
effective)  (Figure  14),  due  to  delays  in  selection  procedures  and  project  completion 
timeline  requirements.  At  the  same  time,  end  beneficiaries  identified  several  ways  to 
improve implementation at the Member State level. Digitalisation was the most common 
suggestion,  with  respondents  in  five  Member  States  calling  for  online  applications, 
digital  submissions,  and  real-time  guidance.  The  same  number  of  end  beneficiaries 
stressed  the  need  to  reduce  administrative  burden  by  streamlining  documentation  and 
simplifying reporting. 

Figure 14 National-level implementation processes rated by activity type (1 = very 
inefficient and 5 = very efficient)  

Source: End beneficiary survey 

53

  Approval  process  refers  to  the  period  during  which  Member  State  authorities  agree  through  internal  procedures  on  which 
investments to submit to the EIB to get greenlight for MF support. Project selection refers to the period during which Member 
State authorities evaluate and shortlist applications submitted by potential end beneficiaries in response to a call for proposals.  

38 

 
 
 
 
End  beneficiaries  are  overwhelmingly  satisfied  with  the  transparency  of  project 
selection  processes  at  national  level.  80%  of  end  beneficiaries  positively  assessed 
transparency of selection processes, referring to public calls, open scoring systems, and 
traceable application processes. Furthermore, the selection criteria for projects were clear 
to  the  majority  (93%)  of  end  beneficiaries,  with  some  commenting  that  decisions  were 
explained or published, although an issue of limited information due to the lack of direct 
access  to  authorities  was  sometimes  raised.  Ways  of  engaging  stakeholders  in  the 
selection  of  investment  vary  across  Member  States  and  involve  public  consultations 
(often  online),  publication  of  details  on  project  selection  criteria,  program 
implementation status, supported investments, application guidelines, and applicant lists. 
At  the  same  time,  consultations  were  not  a  consistent  practice  in  all  Member  States  or 
stakeholders  were  not  always  made  aware  of  them,  as  only  54%  of  end  beneficiaries 
indicated  that  they  had  taken  place.  This  could  be  explained  by  a  lack  of  MF-specific 
public consultations. In many cases, schemes/projects supported by MF were included in 
national  strategic  documents  (such  as  the  NECP  or  other  relevant  national  strategic 
programming  documents),  with  consultations  taking  place  when  these  documents  were 
being developed. 

Some stakeholders call for earlier engagement and the possibility to weigh on long-
term strategy for implementing MF. Some stakeholders, including trade associations, 
NGOs  and  companies  (see  Support  Study  for  more  details)  found  that  they  are  being 
consulted  too  late  in  the  process,  e.g.  after  key  decisions  had  already  been  made,  and 
would  like  to  be  made  aware  of  and  consulted  on  the  long-term  strategy  of  MF 
implementation  and  be  involved  in  the  programme  design  earlier  on.  They  would  also 
welcome the opportunity to be engaged in the advisory bodies or management structures 
both  at  the  national  level,  e.g.  in  working  groups,  and  at  the  EU  level,  e.g.  in  the 
Investment  Committee  or  via  expert  groups.  Smaller,  decentralised  actors  are  also 
sometimes  perceived  as  being  disadvantaged  in  terms  of  access  to  information  while 
larger  companies  have  the  resources  and  networks  to  have  a  bigger  impact  on  the 
process.   

End beneficiaries are satisfied about the publicly available MF-related information, 
whereas  some  stakeholders  call  for  more.  92%  of  end  beneficiaries  indicated  that 
relevant  information  was  made  available  online  or  via  other  means.  At  the  same  time, 
some  NGOs,  trade  associations  and  companies  noted  in  interviews  that  the  available 
information  on  investments  is  incomplete  and  outdated,  with  insufficient  information 
about  the  activities  supported,  data  on  the  results  of  applications  or  the  percentage  of 
funding going to various investment categories. A civil society organisation emphasised 
that EIB assessment documents and assessment documents of Member States should be 
available  and  another  one  that  more  coherence  between  national  websites  and  MF 
website is needed (for instance on the GHG assessments for some investments involving 
gas).  

39 

 
 
 
 
Time  between  disbursement  of  funds  to  a  Member  State  and  conclusion  of  a 
contract  with  end  beneficiaries  is  80%  longer  for  schemes  than  projects.  Member 
States report on average one year and two months (434 days) for concluding contracts for 
schemes, and less than eight months (239 days) for projects, with large difference across 
Member States. The longer time needed to get schemes started can be explained by the 
time needed to run the call for proposals and select end beneficiaries, whereas in the case 
of  projects,  the  final  beneficiary  is  often  determined  already  when  a  Member  State 
submits a proposal to the EIB (54). Member States spend on average, for PIs, 23% of all 
time  spent  dealing  with  these  investments  on  selecting,  submitting  investments  to  the 
EIB,  and  awaiting  disbursement  decisions  from  EIB,  while  implementation  of  the 
investments  (from  EIB  disbursement  to  the  BMS  to  disbursement  by  the  BMS  to  final 
beneficiary)  takes  on  average  77%  of  all  time  spent.  For  NPIs,  the  split  is  on  average 
30% (investment selection and submission) versus 70% (investment implementation), as 
NPIs have stricter documentation requirements under the MF (see Effectiveness section). 

Figure 15 Average number of days between disbursement from the EIB to Member 
States and contract conclusion of Member States with final beneficiaries, 2021-2025 

Source: Modernisation Fund database, data from Member States 

First  payments  to  final  beneficiaries  took  place  on  average  eight  months  after 
contract  conclusion,  with  most  end  beneficiaries  considering  the  process  efficient. 
On average, according to Member States, it took Member States over eight months (247 
days)  to  make  the  first  disbursement  to  end  beneficiaries  after  the  contract  conclusion 
(488 days for projects and 243 for schemes). This seems compatible with the declarations 
made by end beneficiaries in the survey conducted for the support study (see Figure 16). 
Time to second disbursement was on average over eight months from the first payment 
(250 days; 388 days for projects and 248 days for schemes) (55). Finally, it took Member 
States on average just under a year (342 days) to make the third disbursement, which has 
only taken place for some schemes to date. 

54

  Based  on  the  data  from  EIB  and  Member  States  –  Croatia,  Czechia,  Estonia,  Hungary,  Poland,  Romania,  and  Slovakia.  For 
Bulgaria, Greece, Portugal, Latvia, Lithuania, and Slovenia there is no data on disbursements to end beneficiaries, as they have 
not made any as of August 2025. 

55 This number is not strongly representative for projects, as it only includes two projects – 110 and 666 days each. 

40 

 
 
 
 
Figure 16 Time between signing the contract with the Member State and receiving 
the first disbursement (N = 165) 

13

33

17

52

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Less than 3 months

3 to 6 months

6 to 12 months

Over 12 months

Source: data from end beneficiaries survey 

End beneficiaries broadly seem to consider the process leading to payment efficient, 
with  some  challenges  encountered.  56%  of  end  beneficiaries  estimated 
the 
disbursement  process  to  be  efficient  (figure  14)  and  69%  that  the  time  needed  until 
disbursement  was  expected.  However,  60%  signalled  having  met  challenges  in  the 
process delaying the payment. The reasons concentrate around a few recurring problems 
mostly  linked to  administrative and regulatory hurdles (lengthy verification of payment 
requests  to  heavy  reporting  requirements,  complex  procurement  rules)  and  to  a  less 
extent, financial challenges (see Table 3). 

Table 3 Disbursement challenges during the implementation of the project or 
scheme 

Financial challenges 
(6 answers) 
Securing co-financing 
for ineligible costs 

Manage cost increase 

Regulatory challenges 
(10 answers) 
Permitting delays, 
changes to technical 
specification 

Public procurement 

Other challenges (5 
answers) 

Supply chains delays 

Political or institutional 
changes 

Administrative 
challenges (20 answers) 

Preparing payment 
documentation 

Procurement/audit 
compliance 

Internal/external 
approvals 

Source: End beneficiary survey 

Digitalisation,  faster  approval  time,  reduced  administrative  burden,  and  clearer 
guidance were mentioned by end beneficiaries  as avenues for improving efficiency 
of  national  processes.  Digitalisation  was  the  most  common  suggestion,  with  8.5%  of 
respondents from five Member States calling for online applications, digital submissions, 
and  real-time  guidance.  Faster  decision-making  and  shorter  approval  times  were 
highlighted  by  4.2%  of  respondents  from  five  Member  States,  often  linked  to  lengthy 
contracting procedures. 5.4% of respondents, especially in four Member States, stressed 
the need to reduce administrative burden by streamlining documentation and simplifying 
reporting. Finally, clearer guidance and better communication were requested by 2.4% of 
respondents from four Member States.  

4.1.2.3.COSTS AND BENEFITS ASSOCIATED WITH MF IMPLEMENTATION 

Administrative  costs  at  Member  States  level  represent  a  negligible  fraction  of  the 
total MF envelope (0.13%). On average, Member States employ 24 FTEs to manage the 

41 

 
 
 
 
 
 
 
 
MF at the national level at a cost of EUR 566,000 per annum (ranging from EUR 41,000 
to EUR 2.2 million or EUR 1.3 million when excluding one outlier Member State) with 
these  FTEs  being  responsible  for  the  development,  submission,  implementation  and 
monitoring  of  investments  (see  Table  4).  Based  on  their  respective  MF  envelopes,  the 
administrative  costs  for  the  MF  per  EUR  million  range  from  EUR  280  to  EUR  2,800 
(with two outlier Member States with significantly higher costs relative to envelope). For 
most Member States (8/13), the most resource intensive phase is the implementation of 
the  approved  investments.  The  costs  vary  across  Member  States,  with  smaller  Member 
States tending to have higher costs relative to their MF envelope, as they ramp up their 
national  MF  processes  and  receive  comparatively  lower  MF  funding  envelopes.  In 
interviews,  two  Member  States  expressed  concerns  about  high  MF  administrative  costs 
and the absence of the MF funding allocated to administrative costs. Four Member States 
estimated in interviews that they have limited staff capacity and five other indicated that 
administrative capacity is a hindering factor for the achievement of the MF objectives for 
them.  A  trade  association  (56)  also  mentioned  in  an  interview  the  lack  of  resources  in 
national  authorities.  Two  Member  States  estimate  that  efficiency  at  the  Member  State 
level could be enhanced through allowing MF to finance administrative costs related to 
its implementation at the national level. This is different from many EU or national funds 
that allocate part of their budget (around 1-3%) for administrative support, e.g. the Social 
Climate Fund.  

Table 4 FTEs dedicated to MF processes in Member States (57) 

BMS 

Development 
and 
submission of 
investment 
proposals 

Implementatio
n of the 
approved 
investments 

Monitoring of 
implementatio
n 

Total FTEs  Total annual 
costs (EUR) 

Admin costs 
over 10 years 
as a 
percentage of 
MS envelope 

6 
72 

5 
Average 
Total 
71 
* As no projects have yet begun implementation 
Source: survey and Member States’ email communication 

13 
173 

24 
316 

566,000 
7,357,000 

0.13% 

The  evaluation  of  the  Recovery  and  Resilience  Facility  (RRF)  found  that  qualitative 
appreciation  of  costs  based  on  FTE  worked  was  the  preferred  method  of  estimating 
administrative costs, as assuming uniform costs over all six years of the RRF lifetime as 
less credible. Similar to  MF, significant  variations across countries in  FTE declared  by 
coordination bodies both for one-off activities and recurrent activities were found for the 
RRF (58). 

56 Interview with Eurelectric. 
57 The administrative costs were calculated based on 2022 salary figures from Eurostat for public sector employees for the respective 
Member States. An inflator was used to arrive at 2025 prices.  (link) The dataset used did not contain salaries for Greece and 
Portugal.  Salary  figures  for  these  Member  States  were  based  on  earnings  data  of  Member  States  that  have  similar  GDP  per 
capita values. (link) 

58

 European Commission, "Study Supporting the Mid-term Evaluation of the Recovery and Resilience Facility," (link) 

42 

 
 
 
 
 
Most end beneficiaries spend more than 10 working days and up to 5 employees on 
applying to the MF, with costs linked to application processes, administrative tasks 
during  project  implementation,  and  monitoring  requirements.  73%  of  end 
beneficiaries  indicated  that  it  took  them  more  than  10  working  days  to  develop  an  MF 
application  (see  Figure  17),  including  10%  who  estimated  a  total  preparation  time 
exceeding  2–3  months,  particularly  where  permitting,  coordination  with  external 
consultants, or internal approvals were needed. A large share of the effort is dedicated to 
preparing  technical  and  financial  documentation  -  such  as  feasibility  studies,  energy 
audits, cost-efficiency analyses, and detailed project plans (see Figure 18). The number 
of employees end beneficiaries dedicate to the application tasks varies widely with 40% 
dedicating  3-5  employees,  28%  dedicating  1-2  employees,  19%  dedicating  6-10 
employees,  with  the  remaining  13%  dedicating  more  than  10  employees.  Despite  the 
documentation 
the  10)  end 
beneficiaries interviewed  indicated  that  it  is  simpler  to  access  funding  from  the  MF 
relative  to  other  EU  funds  and  the  application  process  is  easier.  In  comparison,  for 
Horizon  Europe  (2021-2027)  proposals,  the  median  consortium  coordinator  spends 
between 36-45 person-days per proposal, with an additional 16-25 person-days spent by 
consortium partners (59). The latter depends on the size of the consortium. 

the  application  process,  one 

required 

(of 

for 

Figure 17 Working days spent by end beneficiaries preparing the application for 
MF support (N=165)  

Source: Survey of end beneficiaries.  

Most  end  beneficiaries  find  complying  with  national  monitoring  requirement 
moderately  burdensome.  57%  rated  the  significance  of  the  administrative  burden 
related to monitoring requirements at national level as moderate, limited or insignificant 
(Figure 17). A majority of beneficiaries spend less than 20% of total project time on MF-
related administrative tasks (see Figure 18). While not a direct comparison, the Horizon 
Europe  (2021-2027)  interim  evaluation  report  found  that  beneficiaries  spend  6-10%  of 
the project budget on administrative tasks. No specific challenges related to monitoring 
by the Member States were repeatedly mentioned by end beneficiaries, with only one end 
beneficiary flagging the time and resources spent on data collection and analysis needed 
to  comply  with  the  monitoring  requirements.  In  comparison,  about  half  of  the 
beneficiaries  of  Horizon  Europe  agreed  to  some  extent  that  ‘project  reporting  requires 
reasonable effort and costs’, while 14% disagreed. 

59  European  Commission  (2025),  Interim  Evaluation  of  the  Horizon  Europe  Framework  Programme  for  Research  and  Innovation 

(2021 – 2024), SWD 110. See link.  

43 

 
 
 
Figure 38 Significance of the administrative burden of complying with monitoring 
by the Member State (N=90)  

Source: Survey of end beneficiaries.  

Figure  18  Time  spent  by  end  beneficiaries  on  MF  related  administrative  tasks 
during the implementation phase of projects/schemes as a share of total project time 
(N=165)  

Source: Survey of end beneficiaries.  

The total cost for EIB and the European Commission is EUR 132 million over MF 
lifetime.  The  EIB’s  role  in  the  implementation  of  the  MF  is  defined  in  the  EU  ETS 
Directive  and  the  MF  Implementing  Regulation.  The  EIB  reviews  investments  and 
confirm  the  status  of  investments  submitted  by  BMSs  and  confirms  or  returns  priority 
ones, conducts financial and technical due diligence of NPIs, including an assessment of 
the  expected  GHG  emission  reductions,  provides  the  secretariat  of  the  Investment 
Committee, transfers the respective resources to the beneficiary Member States, as wells 
as auctions the allowances which provide the resources of the MF and manages its assets. 
Based on the fees paid to the EIB for the past two years, EUR 13 million for 2024 and 
EUR 12 million for 2023 and 2022 respectively, the projection of total expected cost for 
the  EIB  services  would  approximate  to  EUR  130  million  for  the  10-year  lifetime.  The 
European Commission dedicates 1.75 FTEs to the implementation of the MF. Its work is 
mainly shared between the Directorate-General  for Climate Action and the Directorate-
General for Competition, which provides opinion compliance of applications with State 
aid rules on the EIB request. Neither the EIB nor the Commission raised concerns about 
administrative burdens resulting from MF implementation. Over the course of 10 years, 
the administrative costs to the Commission and the EIB are expected to be approximately 
EUR 132 million (0.23% of the MF’s 56.8 billion budget). 

44 

 
 
 
 
 
Table  6    Breakdown  of  FTEs  dedicated  to  the  implementation  of  the  MF  at  the 
European Commission 

Directorate General  

FTEs 

Annual wage rate (60) 

Directorate-General for Climate Action (DG CLIMA) 

1 

EUR 110,000 

Directorate-General for Competition (DG COMP) 

0.75 

Total 
Costs 

EUR 
110,000 

EUR 
82,500 

1.75 

Total 

EUR 
192,500 
Benefits  associated  with  the  MF  are  manyfold.  Beneficiary  Member  States  benefit 
from substantial relevant investments that help them modernise their energy systems and 
reach  their  energy  and  climate  targets.  End  beneficiaries  benefit  from  financing  to 
develop  projects  that  would  otherwise  not  be  funded,  or  at  a  lower  scale  (see  Section 
4.2). At investment level, the MF  confirmation system provides a quality insurance: by 
being  vetted  for  funding,  projects  and  schemes  get  confirmation  of  their  climate 
relevance, as defined by the EU ETS Directive.  

4.1.3.  COHERENCE 

Within  the  broader  ETS  context,  the  MF  is  one  of  the  different  solidarity 
mechanisms  designed  for  redistribution  purposes,  allowing  different  groups  of 
lower-income  Member  States  to  benefit  from  a  higher  number  of  EU  ETS 
allowances.  The  other  solidarity  mechanisms  (stemming  from  Article  10c  and  Article 
10(2)(b)  of  the  EU  ETS  Directive)  are  further  described  in  section  2.1.  Coherence 
between these different  mechanisms is  ensured  by the possibility for  Member States  to 
transfer  part  or  the  totality  of  allowances  referred  to  in  Article  10c  of  the  EU  ETS 
directive to the MF (as described in section 2.1). Channelling these additional allowances 
to  the  MF  ensures  that  they  are  fully  used  for  climate-related  purposes  and  have  gone 
through the additional level of scrutiny required by the MF rules. 

96%  of  the  volume  of  MF  support  dedicated  to  priority  areas  finances  energy 
efficiency,  renewable energy  deployment, energy storage and  the modernisation of 
networks. These areas are strongly aligned with the EU climate and energy framework, 
including the objective to reduce GHG emissions by at least 55% by 2030 and its roll-out 
through several EU policy initiatives and legislative texts.  

Investments  in  energy  efficiency  contribute  to  deliver  on  the  EU-wide  target  of 
11.7%  energy  consumption  reduction  by  2030  included  in  the  Energy  Efficiency 
Directive (61). Such investments correspond to EUR 6.8 billion disbursed by the EIB to 
beneficiary  Member  States  by  mid-2025,  representing  37.4%  of  total  disbursements 

60 The annual wage rate estimate is based on the median monthly salaries (levels 8 and 9) published by the European Union. See: link.   
61  Directive  (EU)  2023/1791  of  the  European  Parliament  and  of  the  Council  of  13  September  2023  on  energy  efficiency  and 

amending Regulation (EU) 2023/955. See link 

45 

 
 
to 

dedicated to PIs. Saving energy is also one of the main priorities of REPowerEU (62) as a 
increase  energy  self-sufficiency.  By  allowing  energy  efficiency 
measure 
improvements  in  a  number  of  sectors,  ranging  from  energy  generation  to  industry, 
buildings, transport, agriculture or waste, the MF supports a comprehensive reduction of 
energy consumption across the economy, covering ETS1, ETS2 and non-ETS sectors at 
the same time. 

Deploying  renewable  energy  contributes  to  meeting  the  2030  EU  target  of  42.5% 
renewable energy share established by the Renewable Energy Directive (63). The MF 
has  disbursed  EUR  5.8  billion  by  mid-2025  to  support  the  deployment  of  renewable 
electricity in heating/cooling, representing 32% of total priority area disbursements. The 
Renewable Energy Directive also includes several sectoral targets which are in scope of 
MF support, regarding buildings (49% renewable energy share by 2030), transport (29% 
renewable  energy  share  by  2030)  and  heating/cooling  (annual  increase  of  1.1%). 
REPowerEU  also  emphasises  the  need  to  accelerate  renewable  energy  production 
capacity  with  a  view  to  gain  energy  independence  from  Russian  fossil  fuel  imports. 
Especially  for  hard-to-abate  sectors,  such  as  heavy  industry  and  transport,  the 
deployment  of  renewable  hydrogen  is  emphasised  in  REPowerEU.  The  MF  explicitly 
supports  the  deployment  of  renewable  hydrogen  under  this  priority  area.  However,  by 
mid-2025,  only  eight  confirmed  projects/schemes  specifically  target  the  deployment  of 
green hydrogen production (64). 

The  importance  of  energy  storage  and  modernising  electricity  networks  is 
recognised  by  several  EU  policy  initiatives  such  as  the  EU  Action  Plan  for  Grids, 
REpowerEU and the Net-Zero Industry Act. The MF supports this area to the tune of 
EUR 7.4 billion disbursed to beneficiary Member States by mid-2025, representing 27% 
of  total  priority-area  disbursements.  The  EU  Action  Plan  for  Grids  sets  out  a  policy 
package  to  accelerate  grid  expansion  and  modernisation  through  amongst  others, 
targeting  faster  permitting  and  financing  conditions  (65).  REPowerEU  seeks  to  end 
dependence on Russian fossil fuels, supporting a higher share of electrification through 
major grid expansion and modernisation.  In  addition,  it highlights energy storage as  an 
essential system enabler to provide flexibility and security of supply (66). The Net-Zero 
Industry  Act  explicitly  covers  energy  storage  with  a  view  to  support  the availability  of 
storage technologies needed for system flexibility (67).  

The  remaining  two  areas  of  priority  support  are  consistent  with  the  objectives  of 
alleviating  energy  poverty  and  a  just  transition  in  carbon-dependent  regions. 
Supporting  low-income  households  and  alleviating  energy  poverty  through  the 
renovation of buildings (EUR 782.6 million disbursed to beneficiary Member States, or 

62 European Commission (2022), REPowerEU. See link. 
63 European Union (2023), Regulation 2018/2001. See link 
64 Modernisation Fund database.  
65 European Union (2023), Grids, the missing link - An EU Action Plan for Grids, COM (2023) 767. See link. 
66 European Union (2022) REPowerEU Plan. See  link.  
67 Regulation 2024/1735. See link. 

46 

 
 
4%  of  total  MF  volume  dedicated  to  priority  areas  by  mid-2025)  is  embedded  in  the 
Energy Performance of Buildings Directive (68) and can also be justified in the context of 
the creation of the ETS2, in line with the principles governing the creation of the Social 
Climate  Fund  (69).  Finally,  just  transition  in  carbon-dependent  regions  (no  investment 
supported by the MF as at mid-2025) can support redeployment, reskilling, education and 
job-seeking  initiatives  in  line  with  the  EU  Just  Transition  Mechanism  and  consistently 
with the Territorial Just Transition Plans. 

The MF’s operating rules effectively ensure the heavy predominance of PIs, thereby 
ensuring  coherence  with  the  MF’s  decarbonisation  objectives  (See  Section  4.1.1.1. 
for  further  details).  As  at  mid-2025,  NPIs  accounted  for  only  6%  of  MF  resources 
disbursed  to  BMS,  corresponding  to  EUR  1.1  billion.  This  is  well  below  the  ceiling 
established  in  the  EU  ETS  Directive  (20%  of  total  MF  support).  The  number  of 
approvals of NPIs is decreasing over the years and remains concentrated in four Member 
States.  PIs  have  a  twice  higher  approval  rate  than  NPIs  and  are  more  likely  to  be 
approved upon the first submission. Finally, Member States strategically prioritise PIs to 
secure faster fund absorption and because they are more aligned with national priorities. 

Fossil fuel investments supported by the MF can raise concerns of their coherence 
with  the  EU  climate  and  policy  framework.  The  2023  EU  ETS  revision  has 
tightened their approval conditions. 21% of PIs and 73% of non-priority ones involve 
gas,  with  high  concentration  in  a  few  Member  States  and  a  somewhat  declining  trend 
(See Section 4.1.1.1). The eligibility of investments involving gas can be seen as a way 
of supporting transitional technologies in lower-income Member States that are currently 
heavily  reliant  on  solid  fossil  fuels  such  as  coal.  Investments  involving  gas  supported 
through  the  MF  were  approved  mostly  based  on  the  fact  they  are  bringing  energy-
efficiency improvements through a fuel switch from coal (all PIs and almost half of NPIs 
supporting gas). The remaining investments supporting gas (all of them NPIs) supported 
gas infrastructure also in a context of transition from coal to gas. The 2023 revisions of 
the  EU  ETS  Directive  introduced  a  ban  on  the  support  of  projects  involving  gaseous 
fossil  fuels,  with  some  exceptions  related  to  allowances  voluntarily  transferred  by 
Member States to the MF, and also with regards to historical MF allowances. The latter 
can still finance investments  supporting  gas, but  with  a phase-out  date,  and conditional 
on  justifying  that  the  investment  is  needed  for  energy  security  reasons  and  alignment 
with the EU Taxonomy and the DNSH criteria (See section 3). 

The  design  of  the  MF  balances  considerations  of  solidarity  and  the  need  for 
convergence.  It  is  the  outcome  of  political  negotiations  between  co-legislators  on  the 
distribution of the decarbonisation efforts and income generated by the  EU ETS  across 
Member States. This explains why the MF includes the possibility to invest in NPIs and 
also in gas, but assorted with a number of safeguards to limit them.  
The MF investments are overall well aligned with Member States’ NECPs, with one 
third  explicitly  referenced  and  the  remainder  generally  consistent  with  NECP 
objectives.  Out  of  194  confirmed/recommended  investments,  64  (33%)  were  found  by 

68 Regulation 2024/1275. See link.  
69 Regulation 2023/955. See link.  

47 

 
 
the authors of the Support Study to be explicitly mentioned in NECPs. They estimated a 
further  130  investments  (67%)  to  be  generally  aligned,  meaning  that  the  project 
description mirrored NECP measures at a broader level or contributed directly to NECP 
objectives  (see  Figure  19).  Importantly,  no  investments  were  identified  as  misaligned, 
while five investments (two gas-fired power plants and three gas transmission pipelines 
in  Romania)  raised  questions  about  their  alignment  with  the  NECP.  Romania’s  NECP 
includes  multiple  measures  on  gas  transmission  and  security  of  supply  but  does  not 
explicitly call for new CCGT plants. However, these investments represent a coal-to-gas 
transition  (replacing  1,620  MW  of  coal  capacity),  an  option  that  is  mentioned  in  the 
NECP.  In  addition,  one  of  the  gas  transmission  pipelines  in  question  is  included  in 
Romania’s National Gas Transmission System Development Plan, ENTSOG’s Ten-Year 
Development Plan, and also classified as an EU Project of Common Interest. 

Figure  19:  NECP  aligned/explicitly  mentioned  investments  by  BMS  (2021-mid-
2025) 

Source: Member States’ NECPs, author assessment (for NECP explicit and aligned) 

Most  beneficiary  Member  States  confirm  that  project  pipelines  were  intentionally 
structured  around  NECP  objectives.  Ministries  in  five  beneficiary  Member  States 
reported that MF investments are either fully aligned or directly integrated into NECPs. 
Where explicit references are less frequent, alignment is ensured through shared strategic 
frameworks  and  governance  mechanisms.  Two  other  beneficiary  Member  States  noted 
that  both  the  NECP  and  MF  projects  are  rooted  in  the  same  strategic  planning 
documents, ensuring coherence even when projects are not individually named. Another 
one has institutionalised this  process  through  an inter-ministerial  committee which vets 
MF  project  proposals  against  NECP  priorities.  This  is  confirmed  by  Member  States’ 
survey  responses,  which  show  that  investments  are  seen  as  well  aligned  with  NECPs, 
with  many  Member  States  integrating  the  MF  into  national  planning  and  budgeting 
frameworks. 

The  MF  is  part  of  a  broader  funding  ecosystem  including  RRF,  Cohesion  policy 
funds  and  national  funding  sources.  These  different  instruments  can  partly  finance 

48 

 
 
similar  activities  (for  instance  renewables  deployment,  energy  efficiency  improvement, 
electricity  grid  modernisation  and  electricity  storage)  but  with  different  rules,  timelines, 
and  documentation  requirements  across  instruments  which  can  prove  challenging. 
Effective implementation across these different funds depends on Member States putting 
in  place  strong  internal  coordination  mechanisms.  The  Commission  actively  helps 
Member States streamline their project pipelines across RRF, Cohesion Funds and MF, 
in particular through the Technical Support Instrument (TSI) (see below). 

rating 

them  as  either 

BMS  use  the  MF,  Cohesion  Policy  and  the  RRF  in  complementary  ways,  either 
through a division of tasks contributing to the same broader policy objectives, or by 
financing  similar  activities  with  a  time  lag.  The  Cohesion  Policy  funds  and  RRF  are 
the most complementary to the MF relative to other funding sources, with six beneficiary 
Member  States 
largely  complementary  or  moderately 
complementary (See figure 20).  While no double-funding of the same investment  costs 
were  identified70,  three  BMS  (71)  reported  supporting  the  same  type  of  activities  with 
Cohesion Policy funds and two BMS with the RRF as with MF. In practice, the MF often 
supports one dimension of a broader policy objective, while the RRF or  the Euroopean 
Regional  Development  Fund/  Cohesion  Fund/  European  Social  Fund  address 
complementary aspects. For example, in Lithuania, the MF provides direct subsidies for 
electric cars, while the RRF finances charging infrastructure (72). Similarly, in Slovenia, 
grid  infrastructure  is  financed  through  the  RRF,  connection  grids  through  the  MF,  and 
smart grids through Cohesion Policy funds (73). In Romania and Lithuania, MF and RRF 
funding  were  used  complementarily  to  finance  different  components  of  larger  schemes 
for  large  renewable  energy  production  deployment  or  schemes  in  the  buildings  sector 
requiring substantial funding volumes. In Czechia, some activities currently supported by 
the  RRF  could  in  principle  also  be  financed  through  the  MF;  however,  it  is  planned  to 
transition to MF support only after the RRF expires (74). Slovakia also used the RRF to 
finance a scheme on electricity production from  renewable sources until  the end of the 
RRF lifetime in 2026, while considering how to ensure continuity of the scheme through 
to MF funding thereafter (75). In a similar vein, Czechia is currently supporting its House 
Energy  Programme  through  both  the  MF  and  RRF  (each  providing  finance  to  distinct 
projects) and plans using the MF to continue funding the components of this programme 
currently  supported  by  the  RRF  after  it  expires  (76).  Finally,  Greece  noted  that  the  MF 
can provide funds on a continuous basis and can therefore bridge potential time gaps in 
cohesion policy funds (77). 

70

71

 BMS have to declare any possible co-financing from other EU sources when submitting MF investments proposals to the EIB.  

 During the survey conducted for the Support Study. 

72 

73 

74 

75 

76 

77 

Case Study on energy efficiency investments.  

Interview with Slovenia.  

Interviews with Czechia. 

Interview with Slovakia.  

Interview with Czechia (case studies). 

Interview with Greece. 

49 

 
 
Figure 20 Complementarity of the MF with other funding sources (N=13) 

Source: Survey with Member States. 

Beneficiary  Member  States  apply  various  coordination  approaches  to  ensure 
coherence  between  the  MF  and  other  EU  funds.  11  beneficiary  Member  States 
confirmed they had coordination mechanisms in place, eight of which qualified them as 
informal  and  three  as  formal  (see  examples  in  Table  7).  Mechanisms  included,  among 
others,  interministerial  committees,  joint  planning  efforts  through  the  state  budget 
strategy, or alignment within managing authorities coordinating several funding streams. 
BMS highlighted that having a single authority manage multiple funds was a significant 
advantage  in  ensuring  complementarity.  Portugal  and  Greece  have  no  coordination 
measures in place yet, which is largely due to the fact that they are in an earlier stage of 
MF  implementation  compared  to  BMS  that  has  been  implementing  the  MF  since  2021 
(78). 

Table 7 Examples of coordination mechanisms in beneficiary Member States 

BMS 

Coordination mechanisms 

Slovenia  

Hungary  

Czechia 

Estonia  

Poland  

Lithuania  

Centralised all funding mechanisms within one ministry. 

Dedicated coordination bodies to align Cohesion Policy, RRF, and MF, including the 
use of a central investment tracking platform 

Interministerial committee to align MF-related decisions. 

Shared  responsibility  of  managing  the  MF  between  two  ministries:  the  Ministry  of 
Finance  integrates  forward-looking  MF  planning  into  the  multi-year  state  budget 
strategy,  while  the  Ministry  of  Climate  ensures  transparency  by  publishing  MF-
related investment documents 

Allocates all MF funds to the National Fund for Environmental Protection and Water 
Management to avoid overlap 

Shared  database  for  beneficiary  data  among  government  entities  managing  EU 
funds, which allows cross-checking and the prevention of double-funding. 

78

 Survey of Member States. 

50 

 
 
 
 
Latvia 

Ensures strategic coherence and prevent overlaps using a ‘double-funding avoidance 
matrix’ 
Source: Interviews with Member States. 

Technical  assistance  provided  through  the  Technical  Support  Instrument  (TSI) 
helps  beneficiary  Member  States  coordinate  fundings  instruments,  including  the 
MF. The dedicated TSI support tool managed by the Commission can assist beneficiary 
Member  States  on  a  voluntary  basis  in  designing  investment  pipelines,  aligning  them 
with MF eligibility rules, and navigating EU procedures. To foster coherence, it provides 
investment  planning  methodologies  and  coordination  templates  for  national  authorities, 
which have been successfully provided to the authorities in Croatia, Greece and Romania 
in relation to the MF (79). 

The  absence  of  MF  investments  related  to  a  just  transition  in  carbon-dependent 
regions may indicate an overlap with the Just Transition Fund. The MF specifically 
includes  a  priority  area  dedicated  to  Just  Transition,  aiming  to  implement  measures  in 
carbon-dependent  regions.  More  specifically,  these  measures  seek  to  support  the 
redeployment, reskilling, upskilling, education, job-seeking initiatives and start-ups in a 
complementary manner  with  relevant  actions included in  the Member States’ territorial 
just transition  plans (80).  However, it is  not further described by the  EU  ETS Directive 
how complementarity should be reached, as in principle the same measures are supported 
by  the  Just  Transition  Fund.  To  date,  no  investment  proposals  on  Just  Transition  have 
been submitted to the EIB by MF beneficiary Member States. One NGO (81) raised the 
potential for overlaps with the Just Transition Fund as both funding instruments address 
the  same  objectives,  whereas  one  industry  stakeholder  pointed  to  the  Just  Transition 
Fund being a more appropriate tool to address Just Transition objectives (82).  

Limited  activity  of  the  MF  supporting  low-income  households  to  alleviate  energy 
poverty could be interpreted as Member States expecting to address this issue with 
the Social Climate Fund. The Social Climate Fund and MF can  partly  finance similar 
activities,  notably  to  support  low-income  households,  to  address  energy  poverty  and 
modernise  their  heating  systems,  which  are  eligible  as  PIs  under  MF.  However,  other 
activities  eligible  to  the  Social  Climate  Fund,  such  as  direct  income  support  for 
households  hit  hardest  by  energy  bills  increase  are  not  eligible  under  the  MF.  By  mid-
2025,  only  four  schemes  have  been  confirmed  for  this  priority  area  in  four  Member 
States for a total amount disbursed by the EIB of EUR 7.8 billion. In all four cases, the 
funding  was  split  across  several  priority  areas.  The  schemes  concerned  focused  on 
increasing  energy  efficiency  and  reducing  greenhouse  gas  emissions  in  households  of 
low-income groups; renovation with a guarantee of savings for single-family buildings; 
energy-saving measures of heating system installations and renewable energy sources in 

79 Interviews with the DG REFORM; TSI 2025 Flagship - Making Energy Systems Fit for the Green and Digital Transition 
80 Article 10d(2) of the EU ETS Directive 
81 Interview with Bankwatch. 
82 Interviews with Eurelectric. 

51 

 
 
residential  buildings  (83),  and  energy  renovation  of  public  buildings  in  the  health  care 
sector. Despite the strong interlinkages between  the dedicated MF priority area and the 
Social Climate Fund, stakeholders did not report on any informal or formal coordination 
mechanisms to ensure coherence between the Social Climate Fund and the MF. This is 
probably because it was too early at the time of interviews (84) to observe any potential 
overlaps,  as  the  Social  Climate  Fund  only  became  operational  in  January  2026.  At  the 
time of data collection for this evaluation, national implementation priorities had not yet 
been finalised. Any possible synergies or overlaps between the two funds can only start 
materialising in 2026. 

4.2.  How did the EU intervention make a difference and to whom? 

The  MF  rules  governing  the  approval  of  investments  allow  for  achieving  higher 
climate and economic benefits than if allowances were spent in the absence of these 
rules.  First  of  all,  all  MF-supported  investments  must  be  State-aid  compliant,  which 
means that they cannot crowd-out private investments and that funding is limited to the 
level  necessary  to  achieve  its  intended  objectives. Furthermore,  all  investments  are 
subject  to  EIB  scrutiny,  and  in  the  case  of  NPIs,  stricter  rules  apply  (due  diligence, 
approval by the Investment Committee necessary). This brings added value compared to 
allowances spent in line with the general rules.  

End beneficiaries and Member States concur that the MF has enabled investments 
that  would  not  have  happened  otherwise.  In  the  survey,  around  70%  of  end 
beneficiaries  indicated  that  their  investments  would  not  have  been  possible  without 
support from the MF (see Figure 43). The MF has, in many instances, bridged funding 
gaps  and  played  a  catalytic  role  where  other  sources  of  financing  were  not  easily 
accessible. Moreover, 65% of end beneficiaries also indicated that the projects would not 
have been implemented at the same  scale or at the same pace without MF support (see 
Figure 44). Eight beneficiary Member States also highlighted that, without MF support, 
many projects would have faced significant delays or might not have been implemented 
at  all  due  to  the  high  capital  requirements.  One  non-beneficiary  Member  States  also 
believe that many projects depended on the MF.  

Figure 43 Modernisation Fund’s impact on project/scheme viability (N=165)  

Source: Survey of end beneficiaries. 

83 

Case study on energy efficiency investments.  

84

 The interviews with beneficiary Member States were conducted in Spring 2025. 

52 

 
 
 
 
Figure 44 Modernisation Fund’s effect on the pace and scale of projects and 
schemes(N=165) 

Source: Survey of end beneficiaries. 

The MF contributed to bridging a sizeable investment gap to reach the 2030 target 
in BMS. Against the backdrop of high investment needs in lower-income Member States 
to  reach  the  2030  climate  and  energy  targets,  the  MF  has  been  essential  for  these 
countries to close the investment gap. It can be estimated that the MF is providing 49% 
of  these  additional  needs  based  on  the  2015  Impact  Assessment  (85)  (see  section  2.2). 
Furthermore,  the  MF  is  mobilising  resources  at  scale  in  a  context  of  falling  private 
investment  trends  in  relevant  sectors  since  the  COVID-19  crisis  (86).  The  MF  has 
mobilised more resources in climate change mitigation in electricity, gas, steam, and air 
conditioning  and  construction  sectors  across  beneficiary  Member  States  than  private 
investors  (see  Section  2.2),  demonstrating  the  MF’s  added  value  in  these  sectors. 
Whereas in electricity, gas, steam and air conditioning, investment volumes dedicated to 
climate  change  mitigation  featured  a  yearly  average  of  nearly  EUR  2.8  billion  in  the 
period  2021-2023,  the  MF  makes  available  roughly  twice  as  much  funding  annually, 
whereas in construction (around EUR 1.6 billion per year), the MF envelope is more than 
three times larger. 

Additionally, as stated in section 2.2, the estimated investment needs based on the 2015 
ETS  impact  assessment  do  not  fully  capture  the  additional  requirements  resulting  from 
subsequent legislative initiatives, notably the Fit for 55 package and REPowerEU, which 
have further increased investment needs towards 2030. Using model-based estimates (87) 
based  on  the  2040  climate  target  Impact  Assessment  (88),  which  take  into  account  the 
achievements of 55% GHG emission reduction by 2030 and the 2050 climate neutrality 
target, as well as an 85% domestic reduction of GHG emissions by 2040, the estimated 
investment  need  is  even  higher  than  the  initial  2015  Impact  Assessment.  The  total 

85

86

87

88

 Impact Assessment 2015 numbers corrected with the 2025 deflating factor to adjust for inflation. 

 Eurostat.com, investments in climate change mitigation by NACE Rev. 2 activity, (link) 

 PRIMES’ model 85% scenario. 

 European Commission, Staff Working Document, "Impact Assessment Accompanying the Document: Proposal for a Regulation of 
the  European  Parliament  and  of  the  Council  on  Establishing  the  Framework  for  Achieving  Climate  Neutrality  by  2040," 
{SWD(2021) 602 final}, (link) 

53 

 
    
  
 
average  annual  investment  need  in  the  energy  system  for  the  13  BMS  between  2021-
2030 is estimated to EUR 75 billion (rounded to the nearest EUR 5 billion) (89).  

MF  funding  aligns  with  national  energy  and  climate  priorities,  and  as  such,  it 
provides  added  value.  MF’s  priority  areas  broadly  reflect  the  main  technological  and 
climate action needs of the Member States.  In the Member States’ survey, all 13 BMS 
indicate a high level of alignment between MF investments and their NECPs’ goals.  

The MF EU added value has been strengthened through mobilising some additional 
co-financing.  In beneficiary Member States, national  budgets  are limited and access  to 
private  capital  can  be  constrained,  as  most  of  the  end  beneficiary  survey  respondents 
suggest. Roughly 30% of the end  beneficiary survey respondents indicated that the MF 
had  a  catalytic  effect  in  attracting  private  sector  funding  for  their  project.  The  MF  has 
mobilised  private  investments  (see  Section  4.1.1.4),  although  data  limitations  impede  a 
robust quantification of the extent to which this has been the case.  

The MF provides  strong EU added value by meeting the investment needs  for the 
2030  climate  and  energy  framework  in  Member  States  with  higher  needs. 
Nonetheless,  the  scale  of  investment  required  exceeds  the  MF’s  capacity,  implying  the 
need  for  complementary  EU  instruments  and  stronger  mobilisation  of  national  and 
private  investment.  The  MF  provides  additional  EU  ETS  revenues  to  BMS  which  are 
spent in line with MF rules, according to which at least 80% of Member States’ national 
envelopes are spent on energy efficiency improvement, deployment of renewable energy 
and  grids,  networks  and  storage.  These  investment  categories  are  fully  in  line  with  the 
needs assessment in the 2015 Impact Assessment, which recalls that the analysis for the 
2030  climate  and  energy  framework  estimates  that  “approximately  15%  of  the  total 
investment  needs  relate  to  power  grids  and  networks,  26%  of  the  investments  are  for 
power generation, including for renewable energy sources, while the remaining 59% are 
for energy efficiency improvements in buildings and in industry.” In the absence of MF, 
the additional auctioning allowances received by beneficiary Member States would have 
to  be  spent  in  line  with  the  framework  applying  to  the  general  pool  of  auctioning 
revenues benefitting all Member States, in accordance with Article 10(3) of the EU ETS 
Directive (90). 

89

 (1) Energy system investment needs exclude all transport investment needs, (2) Investment needs in the residential and services 
sector include only thermal uses (heating and cooling) and renovations. They exclude investment in appliances, which have been 
reported in previous IAs but are not relevant for the MF, (3) Model-based estimates with risk of changing due to finetuning of 
PRIMES model (4) Figures in EUR are rounded to the nearest EUR 5 billion. 

90  Article  10(3)  of  the  EU  ETS  Directive  lists  the  categories  of  spending  on  which  Member  States  can  spend  their  auctioning 
revenues. This includes, in addition to what can be supported by MF, adaptation, research and development and demonstration 
projects to reduce GHG emissions, including in energy efficiency and clean technologies, support to develop other technologies 
that contribute to the transition to a safe and sustainable low-carbon economy, measures to avoid deforestation and support the 
protection and  restoration  of peatland,  forests  and other  land-based ecosystems  or marine-based  ecosystems,  forestry and  soil 
sequestration,  carbon  capture  and  storage  including  DACCS,  investments  in  the  shift  to  forms  of  transport  which  contribute 
significantly  to  the  decarbonisation  of  the  sector,  energy  bill  support  for  low-income  households,  national  climate  dividend 
schemes, administrative expenses for the management of the EU ETS, climate action n in vulnerable third countries, addressing 
residual risks of carbon leakage in some sectors. 

54 

 
 
 
 
4.3. 

Is the intervention still relevant? 

The  current  priority  areas  of  the  MF  still  reflect  the  main  climate  and  energy 
investment  needs  of  the  beneficiary  Member  States.  This  is  particularly  true  of  the 
deployment  of  renewable  energy,  energy  efficiency  and  the  modernisation  of  networks 
and  storage.  While  support  to  low-income  households  and  just  transition  in  carbon-
dependent are relevant policy areas, the MF only indirectly address these areas: 

Renewable  Energy:  Although  the  progress  in  the  deployment  of  renewables  differs 
across Member States, there is an overall deployment gap for many of them to reach the 
2030  renewable  energy  target  of  42.5%.  Member  States  like  Poland  and  Bulgaria  only 
had renewable energy shares of respectively 17% and 19% in 2022, against their country 
specific  targets  of  31.1%  and  30,1%  (91)  still  largely  relying  on  coal  and  gas  (92). 
Romania’s energy mix still relies heavily on fossil fuels, making up about 70%, showing 
a considerable gap to reach the 38% renewable energy share by 2030 (93). Decarbonising 
heating and cooling are a major challenge for the 13 beneficiary Member States. Heating 
accounts  for  a  large  share  of  energy  use,  and  many  of  these  countries  rely  heavily  on 
fossil  fuels  –  coal,  lignite,  or  natural  gas  –  for  space  heating  and  district  heating.  For 
example,  Poland,  Czechia,  and  Bulgaria  still  have  extensive  district  heating  networks 
fuelled  predominantly  by  coal  or  gas,  and  many  individual  households  use  coal  or  oil 
boilers  (94).  District  heating  systems  in  these  countries  are  therefore  in  need  of 
substantive  refurbishment  to  improve  efficiency  and  integrate  renewable  heat  sources, 
which is done in several MF supported projects. 

Energy Efficiency: Improving energy efficiency – particularly in buildings and industry – 
is  a  pressing  priority  across  all  13  BMS  to  reach  the  EED  energy  efficiency  target  (-
11.7%  final  energy  consumption)  by  2030.  These  Member  States  often  have  higher 
energy  intensities  (energy  use  per  GDP)  than  the  EU  average,  reflecting  older 
infrastructure  and  inefficiencies  in  industry.  While  the  EU  average  energy  intensity  of 
GDP  in  2023  is  78  PPS  (per  Purchasing  Power  Standard),  most  beneficiary  Member 
States exceed this level  - for  example Czechia (101 PPS), Slovakia (109 PPS), Estonia 
(105  PPS),  and  Poland  (86  PPS)  (95).  The  recommendations  provided  by  the  2025 
country-specific  recommendations,  align  with  this  assessment  and  urge  these  Member 
States  to  progress  on  energy  efficiency  measures  in  buildings  and  industry  (96).  For 
Slovakia, the quantified objective of reducing the building energy consumption by 17% 
by  2030  (compared  to  2020)  is  put  forward  (97).  Energy  efficiency,  as  the  largest 
investment area of the MF (see Section 3), demonstrates how Member States use the MF 
to address these gaps.   

91 

92 

Country NECPs of Bulgaria (link), and Poland (link). 

EEA (2025), Share of energy consumption from renewable sources in Europe. See link. 

93 European Commission (2025), Recommendation for a council recommendation (RO). See link. 
94 EEA (2025), Share of energy consumption from renewable sources in Europe. See link. 
95 Eurostat (2025), Energy Intensity. See link. 
96 European Commission (2025), Recommendation for a council recommendation. See link. 
97 European Commission (2025), Recommendation for a council recommendation (SK). See link. 

55 

 
 
Energy  storage  and  grid  modernisation:  integrating  a  high  share  of  renewables  will 
require significant energy storage capacity and smart grid upgrades in all 13 beneficiary 
Member States, the importance of which is also stipulated in the TEN-E regulation and 
the Renewable Energy Directive (RED III) (98). Many of these countries currently have 
minimal  storage  and  relatively  outdated  grids.  For  example,  in  Romania,  high-voltage 
distribution  lines  are  on  average  47  years  old,  while  high-voltage  transmission  lines 
average  44  years.  The  country-specific  recommendations  of  the  European  Semester, 
specifically highlight the need for substantiative investments in Romania’s power grids, 
that  are  currently  ill-equipped  to  accommodate  a  large  expansion  of  wind  and  solar 
power generation (99). In Lithuania, distribution lines are around 35 years old on average, 
and  transmission  lines  approximately  36.5  years.  Across  the  EU,  around  40%  of 
distribution  grids  are  more  than  40  years  old  (100).  The  dedicated  MF  priority  area 
responds  to  these  investment  needs,  making  available  funding  for  grid  updates, 
interconnectors and storage capacity (101).  

Support for low-income households: According to the JRC, about 48 million Europeans 
(10.6%  of  the  EU  population)  were  unable  to  keep  their  home  warm  in  2023,  with  the 
worst  rates  in  Bulgaria,  Romania  and  Greece,  and  above-average  energy  poverty  in 
Portugal,  Croatia  and  Lithuania  (102).  The  country-specific  recommendations  of  the 
European  Semester,  amongst  others,  recommend  to  develop  an  information  system  on 
vulnerable households and provide targeted measures (Bulgaria), and to target emergency 
energy  support  measures  to  vulnerable  households  (Slovakia)  (103).  Although  relevant, 
this  investment  field  has  so  far  only  accounted  for  only  4.3%  of  amounts  disbursed  to 
beneficiary  Member  States  (see  Section  3),  suggesting  that  other  Funds  bring  higher 
added value in meeting this need. Nevertheless, the MF has delivered significant support 
to investments in the district heating network, which complement the targeted support for 
low-income  households  affected  by  energy  poverty,  while  also  strengthening  synergies 
with the Just Transition Fund and the Social Climate Fund. 

Just transition in carbon dependent regions: Many former coal regions located in Poland, 
Czechia, Bulgaria or Romania need additional support to finance the transition to a green 
economy  (104).  The  country-specific  recommendations  of  the  European  Semester, 
amongst  others,  recommend  to  consider  specifically  the  impact  on  coal  regions  in  the 
energy  deployment  strategy  going  forward  (Poland,  Romania),  and  to  target  energy 
actions according to regional disparities (Portugal) (105). So far, no dedicated investments 
in  this  priority  area  have  been  made,  which  raises  the  question  of the  relevance  of  this 
area under the MF, in a context where other EU Funds can address this aspect. 

98 Directive 2023/2413, see link, and Regulation 2022/869. See link 
99 European Commission (2025), Recommendation for a council recommendation (RO). See link. 
100 European Court of Auditors (2025), Making the EU electricity grid fit for net-zero emissions. See link. 
101 European Commission (2025) European Grids Package, see link.; Modernisation Fund (2025). See link. 
102 JRC (2025), European rural areas face higher levels of energy poverty. See link. 
103 European Commission (2025), Recommendation for a council recommendation (BG and SK). See link. 
104 European Commission (2025) EU coal regions in transition. See link. 
105 European Commission (2025), Recommendation for a council recommendation. See link. 

56 

 
 
The  continuous  relevance  of  the  MF  is  confirmed  by  its  strong  alignment  with 
Member  States’  NECPs  and  national  investment  needs.  When  comparing  the 
priorities  set  out  in  Member  States’  NECPs  with  the  objectives  of  approved  MF 
investments, 33% were found to be explicitly mentioned in NECPs, and 67% investments 
were classified as generally aligned, and no investments were considered misaligned (see 
Section  4.1.3).  This  is  confirmed  by  Member  States  in  the  survey  conducted  for  the 
Support Study: 12 considered MF investments made to be aligned to a large or very large 
extent  with  national  priorities  indicated  in  NECPs.  This  level  of  alignment  is,  amongst 
others,  originating  from  internal  coordination  procedures  between  the  NECPs  and  MF 
investments.  

The  compatibility  of  gas-related  investments  with  medium-  and  long-term  EU 
decarbonisation  objectives  is  questionable.  Investments  supporting  gas  represent  a 
non-negligible  share  of  investments  across  both  priority  and  NPIs  (21%  and  73%, 
respectively,  see  Section  4.1.1.1).  Despite  the  2023  revision  of  the  EU  ETS  Directive, 
investments supporting gas may still be eligible if they meet a number of conditions and 
as  regards  allowances  voluntarily  transferred  to  the  MF  by  six  Member  States. 
Nonetheless,  a  declining  trent  of  such  investments  has  been  recorded  over  the  years. 
According  to  the  Communication  on  Europe’s  2040  climate  target  and  path  to  climate 
neutrality  (106),  the  EU  needs  to  implement  the  progressive  substitution  of  fossil-fuel 
generation by renewables, complemented by efficient uptake of clean flexibility sources. 
Fossil  fuels  should  be  permanently  removed  from  the  power  mix  over  the  next  two 
decades  with  some  residual  uses  of  gases  in  2040  (107)  divided  between  industry, 
buildings,  and the power system.  While not  fully excluding a role for gas in  2040, this 
points towards i the need to transition away from gas in order to reach carbon neutrality 
in 2050. 

The  eligibility  of  investments  supporting  gas  is  criticised  by  non-beneficiary 
Member States and NGOs, alongside the eligibility of waste-to-energy. All three non-
beneficiary  Member  States  that  are  members  of  the  Investment  Committee  criticise  the 
eligibility  of  gas  under  the    in  the  context  of  EU  decarbonisation  goals  (108).  This  is 
echoed by NGOs, which also extend this criticism to the eligibility of waste-incineration 
projects  (109).  Other  organisations  emphasised  the  need  for  MF  investments  to  place 
stronger  focus  on  energy  communities  and  community-driven  energy  projects,  which 
would  better  reflect  citizens’  needs,  and  contribute  to  the  alleviation  of  energy 
poverty (110).  

106 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee 
and  the  Committee  of  the  Regions,  Securing  our  future,  Europe's  2040  climate  target  and  path  to  climate  neutrality  by  2050 
building a sustainable, just and prosperous society, COM(2024) 63 final, 6 February 2024. 

107 Ibid. “In 2040, the consumption of fossil fuels for energy would reduce by approximately 80% compared to 2021. Coal will be 
phased  out,  while  oil  in  transport  (road,  maritime  and  aviation)  would  represent  about  60%  of  the  remaining  energy  uses  of 
fossil fuels. The remaining use of natural gas would be divided between industry, buildings, and the power system.” 

108 Interviews with Member States, Interviews with NGOs (Bankwatch, WWF, FoE Slovakia). 
109 Interviews with FoE Slovakia, CfE, Bankwatch, Zero Waste Europe, Carbon Market Watch, BirdLife Hungary. 
110  Survey  of  other  organisations  (CEE  Bankwatch,  Bankwatch  Romania,  the  Green  Tank,  European  Cyclists  federation,  Carbon 

Market Watch). 

57 

 
 
The MF focuses on energy system modernisation and energy efficiency, while other 
aspects relevant for decarbonation such as  carbon capture  and  storage, clean  tech 
manufacturing or industry electrification are addressed through other instruments. 
The  Net-Zero  Industry  Act  sets  a  binding  EU  target  of  over  50  Mt/year  CO2  injection 
capacity  by  2030 (111)  and  the  TEN-E  regulation  recognizes  the  critical  role  of  CO₂ 
transportation and storage networks (112). The Net-Zero Industry Act also sets a target of 
net-zero  manufacturing  capacity  to  meet  at  least  40%  of  the  EU’s  annual  deployment 
needs by 2030. Within the EU ETS funding landscape, the Innovation Fund can support 
at scale both carbon capture and storage and clean technology manufacturing. Under the 
MF, they are only eligible as NPI. Industrial electrification is specifically highlighted by 
the Clean Industrial Deal as a key measure for the decarbonisation of industrial processes 
with  an  economy-wide  electrification  rate  of  32%  is  foreseen  by  2030  (113).  Industrial 
electrification is not eligible under PI as the deployment and use of electricity and heat 
can only qualify as PIs if based exclusively on renewables, which means that relying on 
grid  electricity  for  this  electrification  would  disqualify  the  investment.  This  last  point 
was raised as problematic by four industry stakeholders in the Call for Evidence. 

The  magnitude  of  the  estimated  investment  needs  to  reach  the  EU’s  climate 
objectives confirms the continued relevance of the MF. According to the Commission 
Staff Working Document on Investment Needs’ Assessment and funding availabilities to 
strengthen EU’s net zero technology manufacturing capacity (114), the additional private 
and  public  investment  needs  compared  to  historical  spending  in  relation  to  the  green 
transition  are  estimated  at  EUR  477  billion  per  year  between  2021  and  2030.  Out  of 
these, EUR 272 billion per year correspond to the decarbonisation of the energy sector. 
Based on the 2040 Impact Assessment (115) the estimated investment need of the 13 BMS 
is  EUR  75  billion  between  2021  and  2030  in  annual  average  investment  in  energy 
systems.  Additional  transport-related  investment  is  estimated  to  be  about  EUR  205 
billion  per  year.  In  addition  to  this,  delivering  the  REPowerEU  objectives  require  an 
estimated additional investment of EUR 35 billion annually between 2022 and 2027 (116). 
Such  investment  needs  require  a  mix  of  public  and  private  investments,  with  public 
investments  playing  a  crucial  role  in  catalysing  private  ones.  Given  their  high  carbon 
intensity, the MF beneficiaries are likely to represent a significant share of these needs. 

Stakeholders consider  MF support essential to close the investment gap and reach 
the EU’s climate objectives. All beneficiary Member States and many industry-, NGO- 
and end-beneficiary stakeholders surveyed in the context of the Support Study regard MF 

111 European Union (2024), Regulation 2024/1735. See link 
112 European Union (2022) Regulation 2022/869. See link. 
113  Communication  from  the  Commission  ‘The  Clean  Industrial  Deal:  A  joint  roadmap  for  competitiveness  and  decarbonisation’ 

COM/2025/85 final. See link. 

114  Commission  Staff  Working  Document,  Investment  needs  assessment  and  funding  availabilities  to  strengthen  EU's  Net-Zero 

technology manufacturing capacity, 2023(68) final, 23 March 2023. 

115

 European Commission, Staff Working Document, "Impact Assessment Accompanying the Document: Proposal for a Regulation 
of  the  European  Parliament  and  of  the  Council  on  Establishing  the  Framework  for  Achieving  Climate  Neutrality  by  2040," 
{SWD(2021) 602 final}, (link) 

116 European Central Bank (2024), Investment needs to meet EU green and digital targets. See link. 

58 

 
 
support  as  relevant  and  indispensable  for  meeting  climate  action  through  its  systemic 
contribution to energy system modernisation and energy efficiency. More specifically, 12 
BMS consider the MF support as ‘very important’ to achieve Member State energy and 
climate priorities, while one considers it as ‘important’. 114 out of 165 end beneficiaries 
state  that  the  project  or  scheme,  which  was  financed  by  the  MF  would  not  have  been 
possible  without  the  support  of  the  MF (See  Figure  43,  44).  Ten  NGOs  and  five 
industry/trade  organisations  consider  the  MF  objectives  to  be  very  relevant  or  relevant 
with  respect  to  supporting  the  modernisation  of  energy  systems  and  improving  energy 
efficiency  across  the  13  BMS.  Several  beneficiary  Member  States  mentioned  the  MF’s 
unique ability to provide targeted, decarbonation-relevant large-scale support in countries 
with limited financial resources. 

The survey addressing stakeholders from civil society and other organisations, provides a 
consensus  that  the  financing  gap  will  remain  significant,  and  that  the  MF  should  be 
continued.  More  precisely,  the  survey  respondents  were  asked  to  assess  whether  the 
financing gap in lower-income Member States will continue to prompt the need for MF 
support.  All  19  respondents  indicated  that  the  needs  would  persist,  underlining  that 
continued support from the MF will be needed in the future. 

A majority of beneficiary Member States assess that the MF is broadly relevant to 
cover their evolving needs. As depicted in Figure 40, Member States’ opinions on the 
relevance of the NPI and PI categories according to emerging national needs are divided. 
Seven BMS consider them very relevant or relevant, while four regard them as rather not 
relevant  or  not  relevant.  The  latter  pointed  to  several  examples  of  perceived 
misalignment:  the  regulatory  burdens  of  the  current  structure  for  initiating  gas-related 
investments  that  are  hydrogen-ready  (one  Member  State)  and  criticism  of  the 
framework’s rigidity and lack of country-specific responsiveness (one Member State).  

Figure  40  In  light  of  the  evolving  needs  in  your  country,  how  relevant  would  you 
assess the distinction between the categories of PIs/NPIs? (N=13) 

Source: Survey of Member States.  

59 

 
 
 
5.  WHAT ARE THE CONCLUSIONS AND LESSONS LEARNED? 

5.1.  Conclusions 

This  evaluation  provides  a  first  assessment  of  the  progress  achieved  in  the 
implementation of the MF, conducted based on four years of implementation of the MF 
(117) and considering that only few investments have been fully implemented it does not 
yet  assess  the  impacts  of  the  MF.  The  evaluation  therefore  concentrates  on  results 
reached less than halfway through its lifetime. 

The  MF  designs  ensures  that  support  is  allocated  to  projects  that  maximise  the 
attainment of the MF’s objective to modernise energy systems and improve energy 
efficiency. The MF provides that at least 80% of investments supported must be chosen 
within the list of priority areas, specifically defined in the EU ETS Directive. These are 
particularly  relevant  to  the  beneficiary  Member  States  given  their  specific  needs.  For 
NPIs, which represent only 6% of total MF-support volume, approval by the Investment 
Committee  acts  as  a  backstop  to  prevent  approval  of  investments,  which  would  not  be 
impactful in terms of the objectives of the MF.  

The  MF  has  been  effective  in  providing  funding  to  beneficiary  Member  States  to 
support investments relevant for reaching their 2030 climate and energy targets. By 
mid-2025,  the  MF  is  supporting  194  individual  investments  across  12  beneficiary 
Member  States,  representing  EUR  18.9  billion  of  MF  support  or  33%  of  the  total 
estimated  Fund  envelope.  The  yearly  evolution  in  the  number  of  approved  investments 
shows steady activity since the MF’s inception in 2021 and a peak in 2024. The share of 
disbursements  to  Member  States  compared  to  their  total  estimated  enveloped  ranged 
between 0% and 43% in mid-2025 due to institutional preparedness and experience with 
the  MF.  Investments  in  fossil  fuels  supported  by  the  Modernisation  Fund  may  raise 
concerns  regarding  their  consistency  with  the  EU  climate  and  policy  framework.  The 
2023 revision of the EU ETS has introduced stricter conditions for their approval. Gas-
related investments account for 21% of PIs and 73% of NPIs, with a strong concentration 
in  a  limited  number  of  Member  States  and  a  moderately  declining  trend  (see  Section 
4.1.1.1). 

Investments  supported  by  the  MF  are  strongly  aligned  with  the  EU  climate  and 
energy  framework  and  the  National  Energy  and  Climate  Plans.  PIs,  focusing  on 
energy efficiency, renewable energy deployment, energy storage and the  modernisation 
of  networks,  represented  94%  (118)  of  disbursed  funds  to  by  mid-2025,  well  above  the 
regulatory  80%  minimum.  The  approvals  of  NPIs  decreased  over  the  years  and  are 
concentrated in four beneficiary Member States. The predominance of PIs can partly be 

117

118

 Four and a half years (up until mid-2025) for data related to disbursement to Member States, but only four years (up until end 
2024) for data related to contracting and disbursement to end beneficiaries and impact data (installed renewable capacity, energy 
savings, GHG emissions saved, abatement costs) as these are only available in the Member State’s annual reports, the latest of 
which have been produced based on 2024 data. 

 96% if one includes also the investments related to renewable heating, formally approved as non-priority investments, but falling 

under priority investments as an outcome of the 2023 EU ETS revision. 

60 

 
 
explained by the design of the MF: PIs have a twice higher approval rate and are more 
likely to be approved upon first submission. Member States have confirmed strategically 
prioritising PIs. One third of investment supported by the MF are explicitly referenced in 
the NECPs and the remainder are generally consistent with NECP objectives. 

MF-supported  investments  are  expected  to  generate  substantial  transformative 
climate benefits overall their lifetime: 1.15 billion MWh of cumulative energy savings 
and 25 GW of additional renewable capacity estimated across beneficiary Member States 
corresponding to around 34% of the total installed renewable capacity in all beneficiary 
Member  States  in  2020.  GHG  emission  reductions  are  estimated  to  84.8  MtCO₂eq 
average  annually  which  corresponds  to  about  32%  of  total  emissions  of  the  BMS 
electricity,  gas,  steam  and  air-conditioning  sector  in  2020.  By  the  end  of  2024,  two 
investments  had  been  completed,  44%  were  under  construction  and  the  remainder  in 
early implementation phases. In the same period, 55% of the amount disbursed to BMS 
had  been  contracted  to  end  beneficiaries  and  11%  paid  out  to,  with  variations  across 
Member  States.  Both  contracted  amounts  and  disbursements  to  final  beneficiaries 
increased steeply in 2024: an additional EUR 5 billion (+96%) have been contracted and 
EUR 1.3 billion (+185%) disbursed to end beneficiaries.  

The administrative burden for investment approval is linked to the alignment with 
the  EU  climate  framework.  The  process  of  confirming  PIs  is  streamlined,  with 
proposals  being  confirmed  or  not  by  the  EIB  within  4  weeks  of  submission  (119).  The 
higher  administrative  burden  related  to  non-investment  proposals  is  justified  by  their 
relatively lower relevance to achieve the MF’s objectives and meet the EU climate and 
energy  targets.  It  takes  NPIs  2.5  times  longer  to  get  approved,  with  heavier 
documentation  requirements  and  a  stricter  approval  process.  The  administrative  efforts 
for applying to NPIs are estimated 30% higher.NPI 

Beneficiary  Member  States  have  put  in  place  stable  and  efficient  implementation 
structures,  with  some  areas  for  improvement.  Most  beneficiary  Member  States 
involve  multiple  ministries  in  the  proposal  selection  process  to  ensure  broad 
representation and policy coherence. End beneficiaries are broadly satisfied with national 
implementation,  with  a  majority  rating  different  national  process  positively.  First 
payments  to  final  beneficiaries  took  place  on  average  eight  months  after  contract 
conclusion,  with  most  end  beneficiaries  considering  the  process  efficient.  Areas  for 
improvement  which  could  reduce  administrative  burden  and  costs  for  end  beneficiaries 
include  digitalisation  (online  applications,  and  real-time  guidance),  streamlining 
documentation and simplifying reporting. 

National project selection processes are transparent, but some stakeholders call for 
earlier engagement and influence on long-term implementation strategy. 80% of end 
beneficiaries  positively  assessed transparency of selection processes, referring to  public 
calls,  open  scoring  systems,  and  traceable  application  processes.  At  the  same  time, 

119

 If submitted on the last possible day of an investment cycle. 

61 

 
 
consultations were not  a consistent practice in  all  Member States, or stakeholders were 
not always made aware  they occurred. Some stakeholders, including trade associations, 
NGOs and companies found that they are consulted too late in the process, e.g. after key 
decisions had already been made, and would like to be made aware of and consulted on 
the long-term strategy of MF implementation and be involved in the programme design 
earlier on.  

Administrative  costs  at  Member  States  level  represent  a  negligible  fraction  of  the 
total  MF  envelope  (0.13%),  with  important  variations  across  beneficiary  Member 
States.  Four  beneficiary  Member  States  estimated  that  they  have  limited  staff  capacity 
and five other that administrative capacity is a hindering factor for the achievement of the 
MF  objectives  for  them.  Unlike  some  other  funds,  the  MF  does  not  finance 
administrative  costs  related  to  its  implementation  at  the  national  level.  Allowing  this 
would not necessarily increase the overall efficiency of the MF as less funding would be 
available for supporting projects.  

Based  on  available  data,  it  is  difficult  to  draw  conclusions  on  the  administrative 
costs of applying to MF for end beneficiaries. Most end beneficiaries spend more than 
10  working  days  and  up  to  5  employees  on  applying  to  the  MF,  with  costs  linked  to 
application  processes,  administrative 
implementation,  and 
monitoring requirements. 57% rated the significance of the administrative burden related 
to monitoring requirements at national level as moderate, limited or insignificant.   

tasks  during  project 

Cohesion  Policy  and  the  RRF  can  partially  fund  similar  activities  to  the  MF; 
beneficiary  Member  States  use  them  in  a  complementary  way.  The  MF  sometimes 
supports one dimension of a broader policy objective, while the RRF or Cohesion Policy 
addresses  complementary  aspects  (for  instance  direct  subsidies  for  electric  cars  and 
charging  infrastructure).  Some  Member  States  also  envisage  resorting  to  the  MF  to 
continue financing some investments following the expiry of the RRF in 2026.  

The significant estimated investment needs to reach the 2030 target hint at a strong 
continued EU added value of the MF. Against the backdrop of high investment needs 
in  lower-income  Member  States  to  reach  the  2030  climate  and  energy  targets,  the  MF 
financial support has been essential. It can be estimated that the MF is providing 49% of 
the initial additional needs in the 2015 Impact Assessment. However, considering the Fit 
for 55 package and REPowerEU, the investment needs further increase. MF is mobilising 
resources  where  private  investment  decrease  in  relevant  sectors  since  the  COVID-19 
crisis. The MF has mobilised more resources in climate change mitigation in electricity, 
gas,  steam,  and  air  conditioning  and  construction  sectors  across  beneficiary  Member 
States  than  private  investors.  Furthermore,  around  70%  of  end  beneficiaries  indicated 
that their investments would not have been possible without support from the MF. 

The MF provides strong EU added value by specialising in meeting the investment 
needs  for  the  2030  climate  and  energy  framework  in  Member  States  with  higher 
needs.  Nonetheless,  the  scale  of  investment  required  exceeds  the  MF’s  capacity, 
implying  the  need  for  complementary  EU  instruments  and  stronger  mobilisation  of 

62 

 
 
national and private investment. Extending the use of financial instruments as compared 
to  grants  might  further  increase  the  MF  leveraging  effect,  although  this  is  highly 
dependent on the maturity of the technologies supported and the maturity of the financial 
markets  in  BMS.  Still  importantly  dependent  on  coal  in  their  energy  systems,  which  is 
valid  for  most  BMS,  these  countries  have  important  needs  linked  to  the  clean  energy 
transition.  In  that  context,  the  MF  provides  for  a  substantial  redistribution  tool.  In  its 
absence,  beneficiary  Member  States  would  receive  a  significantly  lower  amount  of 
auctioning  revenues,  and  these  would  likely  be  spent  in  a  less  focussed  manner  in  line 
with the rules applying to auction revenues benefitting all Member States in general.  

5.2.  Lessons learned 

With  its  distinctive  governance  structure,  the  MF  succeeds  in  supporting  relevant 
investments to decarbonise the energy systems of lower-income Member States with 
high needs. The distinction between priority and non-priority areas have proved effective 
to  foster investments  aligned with  EU climate and energy targets,  while allowing room 
for some investments in transitional technologies. The Investment Committee, presiding 
over NPI approval, has worked efficiently, with most decisions taken by consensus and 
timely decision-making. Voting rights to non-beneficiary Member States plays a role in 
safeguarding  the  integrity  of  the  MF.  The  mandatory  State  aid  compliance  of  all  MF 
investments  safeguards  the  EU  internal  market  by  minimising  competition  distortions 
and ensures investments do not exceed what is necessary to achieve MF objectives. The 
2023 EU ETS revision further aligned the MF with EU policy objectives by reducing the 
possible  share  of  NPIs,  introducing  a  ban  on  gas-supporting  investments  (with  some 
exceptions) and requiring application of the Do No Significant Harm principle of the EU 
Taxonomy.  

At mid-20205, one fourth of total amounts disbursed to beneficiary Member States 
involved  support  to  natural  gas,  spread  across  both  priority  and  NPIs.  The 
investments  concerned  were  concentrated  in  five  Member  States,  with  three  of  them 
accounting  for  most  of  this  amount  and  supported  energy-efficiency  improvements 
through fuel switch from coal (both PIs and NPIs) and gas infrastructure (NPIs only) also 
in a context of phasing out coal. Following stricter conditions for supporting gas-related 
investments  as  an  outcome  of  the  2023  EU  ETS  revision,  approval  of  investments  has 
somewhat  decreased,  but  there  is  a  lack  of  data  to  draw  conclusions  on  whether  these 
restrictions effectively reduce spending on gas. 

The  comparability  of  data  related  to  environmental  impacts  of  the  MF  is  weak. 
Beneficiary Member States provide annually data on GHG emission savings, abatement 
costs,  energy  savings  and  installed  renewable  capacity  thanks  to  MF-supported 
investments, both by end of the year preceding reporting and over investments’ lifetime. 
The figures reported are developed in the absence of a harmonised methodology, which 
considerably limits comparability across beneficiary Member States and the conclusions 
that  can  be  drawn  based  on  these.    Harmonisation  of  the  methodologies  applied  to 
calculate  GHG  emission  reduction  would  create  additional,  potentially  considerable, 

63 

 
administrative burden for the beneficiary Member States.  The benefits of a harmonised 
GHG  methodology  would  therefore  need  to  be  weighed  against  the  risk  of  additional 
administrative burden and costs.  

Available  data  on  private  co-financing  is  subject  to  significant  limitations.  Private-
cofinancing  is  not  mandatory  under  the  MF.  Related  data  has  been  requested  from 
beneficiary  Member  States  for  this  evaluation,  and  those  Member  States  have  used  to 
different  methodologies,  hampering  comparability.  Using  the  figures  form  national 
authorities,  the  amount  of  private  co-financing  remains  limited.  Private  co-financing  to 
MF-supported investment would amount to EUR 5.5 billion. This amount is importantly 
underestimated as several beneficiary Member States have not provided estimates for the 
entire lifetime of investments, but as amounts pledged through a legal commitment at the 
first quarter of 2025. 

The MF’s monitoring system is broadly functioning well and so far, most data needed 
to assess the effectiveness, efficiency and relevance of the MF is being collected through 
existing  EIB  data  and  beneficiary  Member  States’  annual  reports.  Furthermore,  it 
achieves  a  balance  between  data  collection  needs  and  the  need  to  limit  administrative 
burden falling on beneficiary Member States, which should be preserved. However, the 
monitoring  system  also  has  a  number  of  weaknesses  that  could  be  improved  going 
forward. Most notably, the data collected from beneficiary Member States is not always 
produced  through  a  harmonised  methodology  by  the  BMS  which  affects  comparability 
and  robustness  of  future  analysis.  In  addition,  some  data  included  in  the  report  is  not 
systematically  collected  through  the  monitoring  system  and  had  to  be  collected 
specifically  for  the  evaluation.  There  are  several  possibilities  on  harmonisation  of  data 
collection and additional indicators per investment that could be added to the monitoring 
system.  

For example, the evaluation has shown that improvements in monitoring systematically 
types  of  end-beneficiaries,  implementation  modality  (grant  or  financial  instrument), 
additional private investments, project status and abatement costs would be necessary for 
a more robust future evaluation. The additional monitoring data collected could be used 
to  for  example  analyse  out-crowding  of  private  investments,  energy  efficiency 
contribution to energy prices and differences in end-beneficiaries.  

On the basis of these evaluation findings, the following indicators has been added in the 
Annual Report Template for Member states to be reported on as of 2025: 

Indicator 
Status of investment: unchanged compared to 
initial 
partially 
application,  modified, 
discontinued, fully discontinued 

Implementation 
investments 

Status 

for 

ongoing 

Justification for inclusion 
To better monitor implementation status 
of the projects and if the investment has 
been discontinued or changed compared 
to the initial application.   

To better monitor implementation status 
of the projects. 

Implementation  modality  (grant  or  financial  To  better  monitor  and  analyse 

the 

64 

 
financial instruments used under the MF 
such  as  grants,  partial  grants,  loans, 
equity, financial guarantees.  
To 
and 
better  monitor 
investments different State aid. 
To  better  monitor  and  analyse  flows  to 
different types of end-beneficiaries.  

analyse 

To better monitor and analyse the follow 
of different ETS allowances. 

in 

the 

included 

To  better  monitor 
each  projects 
milestones  and  analyse  implementation 
in more detail. 
The  indicator on  private financing was 
already 
annual 
reporting for  non-priority  investments. 
As  of  2025  MS  are  being  requested  to 
report  on  data  also 
for  priority 
investments. 
To  better  monitor  and  analyse  cost 
reduction  linked  to  energy  efficiency 
projects.  
To better analyse abatement costs as this 
provides  a  more  actuate  depiction  the 
use of EU funds and abatement costs. 

instrument) 

State  aid  regime:  GBER,  CEEAG,  CISAF, 
TCTF, No State aid, De minimis, Other 
Type  of  end  beneficiaries:  Public  entity, 
Private,  Public-private,  Mix  or  public  and 
private entities 
Total  confirmed/recommended  support  from 
the MF split: 

-  Art. 10(1) third subparagraph (2%) 
-  Art. 10(1) fourth subparagraph (2.5%) 
-  Art 10d(4) Transfers 

Date of legal commitment 
Date of first payment 
Date of the last payment 
Confirmation  of  co-financing  from  private 
sources  (both  for  priority  investments  if 
applicable  but  especially  for  non-priority 
investments) in EUR - 

Relative  energy  savings  as  %  of  reduced 
energy 

Abatement cost in EUR/CO2 calculated based 
the 
on  Total  planned 
Modernisation Fund 

support 

from 

65 

 
ANNEX I:   PROCEDURAL INFORMATION 

The evaluation on the operating rules of the Modernisation Fund has been performed in accordance with Article 10d(11) of the EU (link) and Article 15 
of the MF’ Implementing Regulation (link) ((EU) 2020/1001. The reference of the Decide planning entry for the evaluation is PLAN/2024/1415. 

The Lead DG providing the drafting and analytical underpinning of this Evaluation is DG CLIMA. It conducted the evaluation with the assistance of a 
dedicated Inter Service Group of relevant Commission DGs, which met on three instances to provide relevant input into its development, in particular the 
Call for Evidence, the intervention logic and evaluation matrix, the Support Study and the evaluation itself (Staff  Working Document). Because of the 
early stage of implementation of the Modernisation Fund, it has been decided to focus the scope of this evaluation on the operating rules of the Fund. 

The findings of the evaluation rely primarily on the Support Study conducted by an external contractor, the final version of which was transmitted to DG 
CLIMA on 18 December 2025. 

An upstreaming meeting with the Regulatory Scrutiny Board was held on 27 October, together with the evaluation of the Innovation Fund and the back-
to-back evaluation and Impact Assessment of the main EU ETS Directive. 

The detailed description of evidence, sources of information used, and data issues encountered is available in Annex II.  

The Modernisation Fund evaluation was performed following the timeline below: 

Deliverables/milestones  

Establishment of the InterService Group (ISG)  
Creation of ISG’s collaborative workplace, invitations to 1st ISG meeting  
Kick-off meeting with consultant (COWI) 
Draft Call for Evidence  
1st ISG meeting (IF/MF) and consultation on Call for Evidence  
Draft methodology (COWI)  

Due date - Status  
25 March 2024  
6 January 2025  
7 January 2025  
shared on 21 January 2025  
28 January 2025  
24 January 2025  

66 

 
 
  
 
 
 
 
 
ISG consultation via email (intervention logic, evaluation matrix 
and methodology, survey questionnaires)  
Final methodology (COWI)  
Launch of the Call for Evidence  
Closure of the Call for Evidence  
Draft Evaluation Study (COWI)  
2nd ISG meeting (IF / MF – draft evaluation study)  
Early RSB meeting   
Final Evaluation Study (COWI)  
Draft SWD ready at policy officer level   
Draft SWD sent to ISG (ETS: 12 or 16 Jan)  
3rd ISG meeting (IF / MF - final study, draft SWD)   
Ddl for ISG comments  
Send documents to RSB  

RSB meeting  

21 February 2025  
(until 5 March)  
14 March 2025  
14 April  
26 May 2025  
15 September 2025  
8 October 2025  
27 October 2025  
16 December 2025  
31 December 2025  
16 January 2025  
22 January 2026  
29 January  
11 February 2026  

11 March 2026  

Feedback from the Regulatory Scrutiny Board: 

Following the meeting held on 11 March 2026, the Regulatory Scrutiny Board issued on 13 March a positive opinion with reservations. The comments 
received are listed in the table below, alongside the reference to the section of the evaluation where they were addressed.  

Source  
RSB Opinion  
(1)  

Description  
The report needs to clearly explain and analyse the governance of the 
Fund.  
The report should clarify the positioning of the Fund in the broader 
ETS context.   
The report should explain why observational data regarding outputs 
or impacts of the intervention are not available at the time of the 

Addressed in Section  
Section 2.1 Description of the 
intervention and its objectives  

Section 3.1 Current state of play  

Section 4.1.3 Coherence  

67 

 
 
  
  
RSB opinion  
(2)  

evaluation  
The report should provide more clarity on the effectiveness, in 
particular on the end-beneficiaries and the methodology applied for 
calculations of avoided GHG emissions.   
More details should be provided on effectiveness and efficiency of 
various funding mechanisms and on the leveraging effects of 
different financial instruments.  
The report should discuss the effectiveness of the funding vis-a-vis 
the local needs and specific allocation of funding.    

This should include further elaborations on the resulting leverage 
effects and the degree to which private cofinancing is encouraged, 
while not being mandatory.   

Section 1.2 Methodological 
robustness and Limitations  

Section 2.1 Description of the 
intervention and its objectives  

Section 4.1.1.3 Effectiveness at 
Member State level  
Section 4.1.1.4 Leverage effect of MF 
on additional Private co-financing  

Section 4.1.3 Coherence  

RSB opinion 
(3)  

RSB opinion 
(4)  
RSB opinion 
(5)  

RSB opinion 

The report should explain better the impact of non-priority funding 
on the objectives of the Fund  
The  report  should  provide  more  clarity  on  the  role  of  State  aids  in 
particular  in  ensuring  that  these  projects  receive  funding  strictly 
necessary to achieve the objectives.   

Section 5.2 Lessons learnt  

+ Section 2.1 description of the 
intervention +   

Section 4.2. EU added value   

The  report  should  also  include  an  assessment  of  the  governance 
structure  and  distribution  of  responsibilities  across  actors,  including 
the role of the EIB.  
The report should better explain how overspending is avoided in 
cases where the investment does not qualify as state aid.  
Since the report can at this time mostly only provide data regarding 
inputs in terms of the intervention, i.e. budget execution, the report 
should limit itself when presenting findings regarding the efficiency 
of the intervention, (i.e. the relation between inputs and outputs).  
For the efficiency assessment, the report should better assess the CO2 Section 4.1.1.2 Environmental Results 

Section 1.2 Methodological 
robustness and Limitations  

Section 4.2. EU added value  

Section 4.1.2 Efficiency  

68 

 
  
  
  
  
  
  
  
  
  
(6)  

RSB opinion 
(7)  

RSB opinion 
(8)  

abatement costs and explain better the reasons behind the differences 
between Member States, and in relation to plausible benchmarks, 
including the ETS induced carbon price. The report should seek to 
explain whether these differences are due to lack of comparable data 
or to the specific use of funding.  
The report should bring a better overview of the coherence, notably 
in terms of overlap and complementarities (including within the EU 
ETS directive) and comparative effectiveness with other types of 
funding, including EU funding.  
The report should analyse what indicators, data, methodologies and 
monitoring arrangements are required for conducting an informative 
evaluation at the end of the programme period, including the 
identification and measurement of: (1) outputs and impacts of the 
Fund, not only inputs, (2) how and that the Fund is allocated to 
projects that maximise the attainment of the Fund’s objective to 
modernise energy systems and improve energy efficiency, (3) 
whether governance   
arrangements facilitate such an allocation.  

and Planned Impacts of the MF  

Section 4.1.3 Coherence  

Section 1.2 Methodological 
robustness and Limitations  

Section 5.1 Conclusions  

Section 5.2 Lessons learnt  

ANNEX II. METHODOLOGY AND ANALYTICAL MODELS USED 

Mixed-methods analytical approach 

Mixed methods and triangulation of data sources were used to perform the analysis of the findings. The mixed methods and data sources include: 

•  An  extensive  literature  review  was  conducted  of  relevant  EU  and  national-level  documents.  This  included  the  legal  framework  documentation  of  the 
Modernisation  Fund  to  set  out  the  key  expectations  and  preconditions.  In  addition,  the  review  covered  the  annual  reports  from  the  Investment  Committee  and 
Member States, Investment Committee decisions, Investment Committee recommendations, confirmations of PIs, disbursement decisions and assessment guidance 
document. Furthermore, minutes of meetings and presentations of Investment Committee were also reviewed. The review also covered the National Energy and 

69 

 
  
  
  
  
 
Climate  Plans  (NECPs)  of  the  beneficiary  Member  States.  The  review  also  covered  relevant  reports  (e.g.  the  Impact  Assessment  of  the  EU  ETS  Directive, 
Commission reports on technological needs and developments), as well as industry and civil society position papers on the MF.  

•  A  comprehensive  portfolio  analysis  was  performed.  A  comprehensive  database  (the  Modernisation  Fund  database)  was  prepared  based  on  several  sources  of 
information including: 1) financial data provided by the European Investment Bank on investments; 2) data extracted from the annual reports submitted by each 
beneficiary Member  State,  available  up to end 2024;  3)  data  from  Member  States  on  private  and  public  co-financing.  The  process  of  constructing the  database 
involved consolidating disparate formats, ensuring alignment in terminology, and resolving overlaps between submissions and internal entries. While every effort 
was made to achieve a coherent, accurate and exhaustive dataset, the level of granularity and availability of information varies significantly across Member States 
and years. The evaluation dataset was constructed by systematically integrating and enriching multiple sources of information. First, the EIB’s main 
database  was  merged  with  its  detailed  tabular  records  to  create  a  consolidated  foundation.  An  additional  indicator  was  added  to  flag  investments 
involving fossil fuels. The dataset was then supplemented with information from the most recent annual reports (up to 2024), allowing coverage of all 
confirmed investments. Subsequent disbursements and discontinued investments were mapped and linked to their parent investments, with dedicated 
fields retained to track flows over time. Finally, missing fields on priority areas were completed through a combination of documentation review and 
investment descriptions, with weights assigned per investment to capture contributions across multiple priority areas. This structured process resulted 
in a comprehensive and broadly reliable dataset for the evaluation. However, some data limitations persist (see section 3.2). 

•  A comprehensive consultation strategy, further described in Annex V. 

•  Three thematic case studies were prepared on investments comprising 1) energy efficiency, 2) renewable energy, and 3) NPIs. Each case study encompasses two 
to three selected investments that were sampled for further analysis. The selected investments were chosen to ensure balanced representation of Member States, 
types of investments / sectors, and volume of financing. The case study analysis is based on desk review, the Member State and beneficiary survey, the investment 
database, and interviews with end beneficiaries (or project coordinators for schemes).  

•  The case study on energy efficiency covers three schemes, namely an energy efficiency support scheme for households (Czechia), a scheme supporting energy 

efficiency in emission-intensive industries (Slovakia), and a direct support scheme for the purchase of electric vehicles (Lithuania).  

•  The  case  study  on  renewable  energy  covers two  schemes,  namely  a scheme  to  produce  electricity  for  the  manufacturing  industry (Croatia),  and  a  support 

scheme for residential heat pumps (Poland). 

•  The case study on NPIs covers a project involving the development of a gas transmission pipeline (Romania) and a scheme supporting the modernisation of 

energy sources in thermal energy supply systems (Czechia). 

Methodological strengths and weaknesses 

70 

 
 
•  Robustness of evaluation analysis. The evaluation relies on a well-defined intervention logic that lays out the causal relations between the different 
expected outputs, results and impacts of the MF, both in terms of its actual objectives and in terms of the functioning, governance and processes. The 
intervention logic provided the basis for defining the key sub-questions, judgement criteria / hypotheses, and indicators, in line with the evaluation 
questions set out in the Tender Specifications. A comprehensive evaluation matrix was then developed to guide and structure the systematic analysis 
undertaken in this evaluation. 

•  Comprehensive evidence base  established through a systematic approach to data collection.  A comprehensive  evidence base was established 
through  a  systematic  and  multi-layered  approach  to  data  collection.  Evidence  was  gathered  continuously  throughout  the  evaluation  by  combining 
literature and desk reviews, statistical analysis, and stakeholder consultations at both EU and Member State level. This mixed-method design enabled 
the evaluation team to draw on a wide range of quantitative and qualitative inputs and perform robust triangulation, ensuring that findings could be 
cross-validated, inconsistencies identified, and conclusions grounded in strong evidence.  

However, some limitations remain:  

•  The analysis of impacts and outcomes is constrained by the early implementation phase of most supported investments. There is a time lag 
between when investments are approved and when they deliver measurable results. Many investments supported by the MF are still in the early stages 
of  implementation,  meaning  that  completion  of  projects  and  corresponding  actual  effects  on  emissions  reductions,  energy  savings,  or  capacity 
deployment  cannot  yet  be  fully  captured.  While  mitigation  measures  were  taken,  including  dedicated  case  studies  with  deep  dives  into  specific 
measures, the actual full effect of the MF is still to be ascertained once the investments are completed. The evaluation focuses on the MF’s direct 
outputs and outcomes, but broader systemic impacts (e.g. actual GHG emission reductions) are difficult to capture within the available timeframe and 
evidence base. 

•  The financial and monitoring data are impacted by reporting inconsistencies. The analysis is constrained by variations and inconsistencies in the 
way financial flows and monitoring data are reported across beneficiary Member States and sources. These differences limit comparability and reduce 
the  reliability  of  aggregated  figures.  Corrections  were  made  through  continuous  dialogue  between  the  evaluation  team,  the  EIB  and  the  European 
Commission. Noteworthy limitations include:  

71 

 
 
 
o  Uncertain total investment costs, private and public co-financing – investments projects are still ongoing or not yet started, meaning reported total 
costs remain provisional. In addition, data on private and public co-financing are not subject to specific reporting requirements for the MF and 
were requested from beneficiary Member States specifically for the purpose of this evaluation, but the data provided lacks comparability. 

o  Inconsistent and variable annual-report data – figures reported by beneficiary Member States in annual reports vary from year to year and are not 

fully consistent. 

o  Estimation  of  investment  breakdown  where  investments  are  spread  across  different  priority  areas.  Because  beneficiary  Member  States  rarely 
provided  their  own  approximations  (per  priority  area)  for  investments  spanning  multiple  priority  areas,  most  estimates  were  derived  by  the 
evaluation team and the EIB based on the investment submission forms, follow-up clarification questions, and informed professional judgement. 
This process also evidenced data discrepancies, where differences between disbursement figures in annual reports from the beneficiary Member 
States and EIB data were observed. 

o  Lack  of  harmonised  definitions  serving  as  a  basis  for  reporting  –  this  is  the  case  in  particular  for  amounts  contracted  to  end  beneficiaries  and 
impact data (GHG emissions, energy savings, abatement costs). Such discrepancies  were, when possible, manually corrected by the evaluation 
team in dialogue with the EIB and based on direct feedback from the Member States.  

ANNEX III. EVALUATION MATRIX AND, WHERE RELEVANT, DETAILS ON ANSWERS TO THE EVALUATION QUESTIONS (BY CRITERION) 

Evaluation Matrix 

Effectiveness  

EQ  

EQ 1. How successful has the 
Modernisation Fund been in 
selecting investments that are 
conducive to modernise energy 
systems and improve energy 
efficiency? Will the objectives 
of the MF be achieved on time? 

Sub-EQ 

EQ 1.1 Is the MF on track of selecting 
and financing investments? 

Judgement criterion 
Funds are being disbursed progressively and regularly, 
in a way that is commensurate with the available 
envelope and the lifetime of the Fund. No 
underutilisation of funds is detected. 

Indicators 

Number of investment proposals confirmed/recommended 
Total amount disbursed, overall and per MS 
% of total envelope disbursed, overall and per MS 
Year-on-year change in number of investments confirmed/recommended 
and in disbursement between 2021-2025 

EQ 1.2 What total amount of support has 
been confirmed/disbursed to MS (i.e. for 

Total amounts confirmed and disbursed to MS are 
proportionate with MSs total envelopes and the number 

Total amount of support confirmed, and total amount disbursed to MS, 
overall and per MS, change over time (annual) 

72 

 
 
EQ  

Sub-EQ 

schemes it differs from the amount 
disbursed), and how does that compare to 
beneficiary MS’s envelope? 

Judgement criterion 
of years of implementation of the Fund and the number 
of remaining years for each Member State. These 
amounts are increasing over time. 

Member States have a multi-year strategy for spending 
funds (=they submit and get schemes confirmed, that 
are implemented over several investment cycles) 
Schemes are being implemented (subsequent 
disbursement proposals are submitted and confirmed) 

The share of PI is at/above the minimum regulatory 
level. There is an increase in priority versus NPIs over 
time.  
The delineation of priority and non-priority areas 
reflects the strategic objectives of the MF and the 
climate needs of MS. 

PIs are conducive to substantial modernisation of 
energy systems and energy efficiency improvement. 
NPIs contribute to modernisation of energy systems and 
energy efficiency. 
The investments in gaseous fossil fuels (both for PI and 
NPI) are limited and decreasing over time. No support 
from the MF is provided to energy generation facilities 
that use fossil fuels. 
MF investments directly/indirectly contribute to a just 

Indicators 

Confirmed support as % of total MS envelope, change over time 
(annual) 
Support disbursed to MSs as % of total MS envelope, change over time 
(annual) 
Amount disbursed to schemes as a % of amount confirmed for schemes, 
overall and per MS 
Year on-year variation of confirmed vs. disbursed amounts between 
2021-2025 
Percentage of schemes which have been subject to subsequent 
disbursement decision(s), overall and per MS 
Total amount disbursed overall on priority areas and per priority area, 
per MS 
Total amount disbursed overall on non-priority areas and per non-
priority area, per MS 
Ratio between priority and NPIs, overall and per MS, per type of 
investment 
Approval rate between priority and NPIs, including timelines and 
rejection rates and reasons for non-priority projects 
Challenges reported by MS in aligning their investments with priority 
areas or in having NPIs approved 
List of types of confirmed investments between 2021-2025 
% of total PIs allocated to each category (e.g., renewables, efficiency, 
networks). 
Nature of NPIs and justification for recommending the investment 
% of investments spent on fossil fuels and annual change 
Stakeholder feedback on gaps in support or funding coverage necessary 
to meet 2030 targets 
No. and volume of investments in priority areas E (120), F (121) and 
partially priority area C (122) concerning energy efficiency in residential 

EQ 1.3 Is the MF successful in gearing 
MF towards investment in priority areas? 

EQ 1.4 Is the nature of supported 
investments in line with Fund’s 
objectives? 

(120) Support for low-income households, including in rural and remote areas, to address energy poverty and to modernise their heating system. 
(121) A just transition in carbon-dependent regions, to support the redeployment, reskilling and upskilling of workers, education, job-seeking initiatives and start-ups, in dialogue with civil society and social partners. 

73 

 
 
 
EQ  

Sub-EQ 

Judgement criterion 

Indicators 

transition, including support for lower-income 
households, energy poverty reduction, and labour 
market resilience in carbon-dependent regions 

buildings, with specific focus on lower-income households, social 
housing.  
% share of funds allocated for such investments on total MF allocated 
funds. 

EQ 1.5 What is the potential GHG 
reductions/energy savings/additional 
renewable energy from supported 
investments? 

The investments have potential for significant GHG 
emission reductions, energy savings and additional 
renewable energy.  
Where actual data on reductions/savings/additional 
capacity are available, these match the expected 
potential.  

EQ 1.6 How relevant is the pipeline of 
projects with the objectives of the Fund? 
Is the pipeline then followed by 
beneficiary MS when submitting 
investment proposals? 

EQ 1.7 Are investments supporting 
National Energy and Climate Plans? 

The project pipeline up to the first cycle of 2025 reflects 
the strategic goals of the Modernisation Fund, including 
the modernization of energy systems and enhancement 
of energy efficiency in beneficiary MS. 
The project pipeline is followed by beneficiary MS 
when submitting investment proposals.  
The investments of the MS are supporting their 
National Energy and Climate Plans’ priority areas and 
objectives.  

Estimated potential and reported (if available) GHG reductions (tons of 
CO2e) by MS 
Estimated potential and reported (if available) energy savings (MWh) by 
MS 
Estimated potential and reported (if available) renewable capacity added 
(MW) 
% of pipeline projects in priority areas in beneficiary MS 
Perception of the relevance of the pipeline of upcoming projects with the 
objective of the Fund of modernisation of energy systems and 
enhancement of energy efficiency 

% of investments explicitly referenced in NECPs, overall and per MS 
Perception of alignment of investments with NECPs 

(122) Reduction of overall energy use through energy efficiency including in industry, transport, buildings, agriculture, and waste. 

74 

 
 
 
EQ  

Sub-EQ 

Judgement criterion 

Indicators 

EQ 2. How effectively is the 
MF implemented at Member 
State level? 

EQ 2.1 How is implementation of 
investments progressing on the ground? 

Funds disbursed to MSs have moved to contracting 
and/or disbursement to end beneficiaries, indicating 
implementation progress. Any discrepancies between 
amounts disbursed to MS and amount 
contracted/disbursed to end beneficiaries are justified 
and do not indicate significant delays or underutilisation 
of funds. 
The contracted/disbursed ratio to final beneficiaries is 
proportionate with the disbursed amounts to the MS. It 
is increasing over time. 
If implementation is not yet in contracting phase, calls 
for proposals (or other relevant implementing steps) are 
being run. 
Disbursed amounts lead to construction and project 
completion. 
The monitoring systems of investments of the MS 
(financial and environmental) are operational and 
assessed as effective.  
Member States take actions to deal with slow 
implementation/lack of implementation. 
If needed, investments are declared (partly) 
discontinued and funds reattributed to other 
investments. 
The reasons for discontinuation of declared amounts are 
well documented and the discontinuation rate is 
minimal.  
Regular audits are carried out at national level. The 
audits certify effective use of funds and/or led to 
corrective actions. 

The investments were impacted by regulatory, financial 
or technical challenges at an EU or national level. The 
investments were impacted by geopolitical and market 
changes (e.g. energy crises, raw material shortages, 
Russian war against Ukraine). 

75 

% of amount contracted to final beneficiaries compared to amount 
disbursed to MS, overall and per MS. Change over time (annual). 
% of amount disbursed to final beneficiaries compared to amount 
disbursed to MS, overall and per type of investment. Change over time 
(annual) 
Other indicators of project/scheme implementation (No. of calls for 
proposals launched, No. of projects under construction, No. of projects 
completed) 
Time elapsed between MS disbursement and final beneficiary contract 
signing/disbursement 

Existence of monitoring framework 
Frequency and comprehensiveness of MS monitoring reports 

Number of discontinued investments and % of discontinued 
investments, per type of investment, overall and per MS 
Reasons for discontinuation 
Any other action taken by MS to deal with slow implementation / lack of 
implementation 

Number of audits conducted/ being conducted/ that will be conducted, 
per type of investment, overall and per MS 
Available audit outcomes and actions taken 
List of identified internal and external barriers affecting project progress, 
at EU and national level 
Frequency of reported delays or complications in implementation of 
projects under the MF  
Actions taken to mitigate hindrances 

EQ 2.2 How do Member States ensure the 
monitoring of investments? 

EQ 2.3 How do Member States manage 
low-performing investments? 

EQ 2.4 Have any audits taken place at 
national level? What is the outcome? 

EQ 3.1 What factors are hindering the 
achievement of the MF objectives? 

EQ 3. Which factors are 
hindering (or supporting) the 
achievement of the MF 
objectives? 

 
EQ  

Sub-EQ 

Judgement criterion 

Indicators 

EQ 3.2 What factors are supporting the 
achievement of the MF objectives? 

EQ 4. How effective has the MF 
been in implementing 
communication and publicity? 

EQ 4.1 To what extent is visibility of the 
funding from the MF ensured by the 
beneficiaries? 

The investments were supported by stable regulatory, 
financial and technical conditions at an EU and national 
level. Other national-level contextual factors related to 
the governance and implementation of the MF have 
supported the achievement of the objectives. 
The beneficiary MS ensure appropriate visibility of the 
funding for the investments in line with the 
requirements of the EU ETS Directive (Article 30m 
(2)). 

EQ 5. How effective has the MF 
been in mobilizing other 
national and private funding? 

EQ 5.1 How effective has the MF been in 
mobilising other private sector funding?  

The catalytic effect of the MF in mobilising additional 
private sector funding is high. Good practices are 
recorded in Member States.  

EQ 5.2 How effective has the MF been in 
mobilising other public sector funding?  

The catalytic effect of the MF in mobilising additional 
public sector funding is high. Good practices are 
recorded in Member States. 

List of identified internal and external factors facilitating project 
progress, at EU and national level 

% of projects where beneficiaries use the label "co-funded by the EU 
ETS" and comply with visibility requirements 
% of projects where beneficiaries use physical communication measures 
(e.g., signage, plaques) at project sites 
Types and frequency of challenges reported by Member States or 
beneficiaries (e.g., administrative burdens, costs) 
Total amount of private funding mobilised through MF-supported 
projects 
% of projects receiving private fundings 
% of projects affected by barriers to private funding 
List of identified barriers to private investment 
Number of projects using innovating funding mechanisms such as 
blended finance or loan guarantees 
Total value of funding mobilised through innovative funding 
mechanisms 

Total amount of national co-financing mobilised, overall and per MS 
% of projects receiving national co-financing 
Evidence of good practices in national co-financing 
Evidence of complementarity of MF funds with other EU instruments 
(e.g., cohesion funds, RRF, SCF) 

Efficiency 

EQ  

Sub-EQ 

Judgement criterion 

Indicators 

EQ 6. How efficient is the 

EQ 6.1 Are the regulatory deadlines set for 

The timelines set by the ETS Directive 

Time elapsed between application and 

76 

 
 
 
EQ  

Sub-EQ 

Judgement criterion 

Indicators 

confirmation/recommendation process 
under the MF at EU level? 

application and (i) confirmation / 
recommendation for funding and (ii) 
disbursement appropriate?  

EQ 6.2 Is there an opportunity for beneficiary 
MS to discuss proposals with the EIB before 
submitting formally? Is the assessment 
guidance document helpful and abided by? 
How many cycles does it take on average for 
an investment to get approved? 

between each step of the process from 
application to confirmation / 
recommendation and disbursement is 
perceived as appropriate.  

confirmation / recommendation for funding. 
Time elapsed between confirmation / 
recommendation for funding and disbursement.  

The beneficiary MS can discuss proposals 
(if required) with the EIB before 
submission to ensure that only robust and 
suitable proposals are formally submitted 
and to minimise the need for further 
information to be provided at a later stage.  
The time from submission to approval of 
investments is kept to a minimum 
(number of investment cycles on average 
for approval of an investment is limited). 
Any rejections of proposals are well 
motivated. 

Engagement of beneficiary MS engagement 
with EIB before submission of proposals (and / 
or opportunity to do so if required).  
Stakeholder feedback on added value of such 
engagement. 
% of applications submitted with all required 
info and supported documentation at first, 
second, subsequent submission 
Number of cycles for investment approval, 
distinction between schemes and projects 
Reasons for possible delays. 

EQ 6.3 Investments must be State Aid 
cleared. Does the EIB confirmation / 
recommendation add much additional 
burden? Is it efficient in terms of delivering 
additional climate benefit compared to 
national investments that are only subject to 
State Aid approval? 

The EIB confirmation / recommendation 
adds minimal burden and is efficient in 
terms of delivering additional climate 
benefits compared to just State Aid 
approval. 
Proposals are returned for reasons other 
than lack of State aid compliance 

Additional time and resources for each actor 
linked to EIB confirmation / recommendation.  
Stakeholder feedback on any climate benefits 
the need for EIB confirmation/recommendation 
may bring compared to just State Aid approval 
(which is not linked to climate benefits). 
Share of returned proposals where the reason is 
lack of compliance with State aid rules (% of 
total number of returned proposals) 

EQ 6.4 What is the additional burden of 
applying for a NPI as compared to a PI? Is it 
justified?  

The additional burden of applying for a 
NPI are limited relative to a PI.  
This additional burden is justified based 
on the differences in priority status of a 
proposal. 

Overall burdens and costs associated with 
applying for a NPI and PI focused on 
differences between the two e.g. need for a 
technical and financial due diligence 
assessment to be conducted by the EIB for NPI.  

77 

 
 
 
   
 
 
EQ  

Sub-EQ 

Judgement criterion 

Indicators 

NPIs are more difficult to get vetted than 
PIs. 

EQ 7. How efficiently is the MF 
implemented at a Member State level 
including the development and 
submission of investment proposals 
and their subsequent implementation? 

EQ 6.5 How efficient are Investment 
Committee proceedings? Does the 
Investment Committee usually follow the 
recommendation of the EIB? Are Investment 
Committee decisions usually taken by 
consensus? 

EQ 7.1 How efficient and transparent is the 
process of selecting which investments a MS 
will submit for MF funding, as well as the 
process of developing and submitting 
investment proposals? Can stakeholders 
(businesses / civil society) influence this 
process? 

The Investment Committee proceedings 
are efficient for decision making and 
usually taken by consensus.  
The Investment Committee usually follow 
the EIB recommendation.  

The MS processes for developing and 
submitting investment proposals are 
efficient and fit-for-purpose. 
The process of selecting investment 
proposals is efficient and transparent with 
key stakeholders consulted and 
information made publicly available. 
Stakeholders can provide inputs to the MS 
authorities to influence the selection of 
investments submitted for funding.  

Stakeholder views on justification for 
differences in burdens and costs. 
% of confirmed PIs compared to PI 
submissions 
% of confirmed NPIs compared to NPI 
submissions 

Time and resources for Investment Committee 
proceedings.  
Investment Committee decisions compared to 
EIB recommendation. 
Whether decisions are taken by consensus or 
not.  

Resources required for developing and 
submitting investment proposals and 
implementing investments.  
Perception of beneficiary MS and final 
beneficiaries of the efficiency of the processes 
relative to the benefits 
Consultation undertaken at MS level with key 
stakeholders for identifying and selecting 
investments to apply for funding (investment 
pipelines and large-scale investments).  
Availability of relevant documentation online 
and/or made available via other means.  
Stakeholder views on the transparency of the 
process and opportunity for them to provide 
feedback to influence the selection of 
investments submitted for funding. 

EQ 7.2 What is the time between 
disbursement to beneficiary MS and (i) 

The time between disbursement to 
beneficiary MS, contract with final 

Time elapsed between disbursement to 
beneficiary MS, contract with final 

78 

 
 
 
EQ  

Sub-EQ 

Judgement criterion 

Indicators 

Relevance 

EQ  

EQ 9. To what extent are the objectives 
of the MF still relevant in the current 
context of climate action and technology 
deployment needs in lower-income 
Member States? Will they be still 
relevant based on expected evolution on 
the coming years? Do these issues still 
require action at the EU level? 

contract with final beneficiaries and (ii) 
disbursement to final beneficiaries? 

beneficiaries and disbursement to final 
beneficiaries is appropriate to ensure 
effective implementation.  

EQ7.3 Are the MS processes for 
implementing investments efficient?  

The MS processes for developing and 
submitting investment proposals and 
implementing investments are efficient 
and fit-for-purpose. 

beneficiaries and disbursement to final 
beneficiaries. 
Perception of beneficiary MS and final 
beneficiaries of the time needed for 
disbursement.  

Resources required for implementing 
investments. 
Perception of beneficiary MS and final 
beneficiaries of the efficiency of the processes 
relative to the benefits. 

Sub-EQ 

Judgement criterion 

Indicators 

EQ 9.1 To what extent are the objectives 
of the MF and the categories of priority 
and NPIs still relevant in the current 
context of climate action and technology 
deployment needs in lower-income 
Member States? 

The objectives of the MF (i.e. 
modernisation of energy systems, 
enhancement of energy efficiency and 
increased renewable energy production), 
the categories of priority and NPIs match 
actual climate and energy needs and 
objectives of lower income Member States 
(as stated in their NECPs). 

Differences between the MF objectives, the 
categories of priority and NPIs, and the actual 
climate and energy needs and objectives of 
lower income Member States 

Stakeholder assessments of relevance of the MF 
objectives and the categories of priority and 
NPIs to address the climate action and 
technology deployment needs in lower-income 
Member States. 

EQ 9.2 Will the objectives of the MF and 
the categories of priority and NPIs still be 
relevant based on expected evolution on 
the coming years?  

Do the climate action and technology 
deployment needs in lower-income 
Member States still require action at the 

The objectives of the MF (i.e. support to 
lower-income MS in the modernisation of 
energy systems, enhancement of energy 
efficiency and increased renewable energy 
production) and the categories of priority 
and NPIs of the MF continue to be relevant 
in light of evolving needs of the beneficiary 

Differences between the MF objectives, the 
categories of priority and NPIs and the evolving 
climate and energy needs of lower income 
Member States 

Projected financing gap for modernisation of the 
power sector, energy systems and improvement 

79 

 
 
 
EQ  

Sub-EQ 

EU level? 

Judgement criterion 

Member States. 

Indicators 

of energy efficiency in beneficiary MS 

EQ 10123. To what extent are the 
objectives of the MF still relevant for the 
current EU policy goals? 

EQ 10.1 To what extent are the objectives 
of the MF still relevant for the current EU 
policy goals? 

The financing gap in lower-income 
Member States for modernisation of the 
power sector, energy systems and 
improvement of energy efficiency is 
expected to continue to exist and prompt 
the need for continued MF support. The 
financing gap cannot be covered by 
national funds.  

The objectives of the MF (i.e. support to 
lower-income MS in the modernisation of 
energy systems, enhancement of energy 
efficiency and increased renewable energy 
production) are still aligned and relevant 
for the current EU policy goals (EGD, 
REPowerEU, Net-Zero Industry Act, 
Critical Raw Materials). 

Degree of alignment of MF objectives with EU 
policy goals  

Contribution of the MF objective to specific 
policy goals (e.g., renewable energy targets, 
energy efficiency improvements, emissions 
reductions). 

Stakeholder assessments of the relevance of the 
objectives of MF for the current EU policy goals 

EQ 10.2 To what extent are the priority 
and non-priority categories supported by 
the MF still relevant for the current EU 
policy goals?  

The categories of priority and NPIs funded 
by the MF are still aligned and relevant for 
the current EU policy goals (EGD, 
REPowerEU, Net-Zero Industry Act, 
Critical Raw Materials) 

Degree of alignment of the categories of priority and 
NPIs with EU policy goals  

Contribution of the categories of priority and NPIs to 
specific policy goals (e.g., renewable energy targets, 
energy efficiency improvements, emissions reductions) 

Stakeholder assessments of the relevance of the 
categories of priority and NPIs for the current EU policy 
goals 

123 The findings of EQ 11 were merged into EQ 10 due to overlaps. EQ 11 was therefore deleted from the Relevance criterion and the overview table.  

80 

 
 
Coherence 

EQ  

Sub-EQ 

Judgement criterion 

Indicators 

EQ 12. How are the MF activities and 
operating rules (incl. the distinction 
between priority and NPI) coherent with 
the objective of the Fund and of EU 
Policy? 

EQ 12.1 To what extent are the MF 
operating rules on priority and NPIs and 
their delineation coherent with the objectives 
of the Fund?   

EQ 12.2 To what extent are the MF 
operating rules on priority and NPIs and 
their delineation coherent with the EU 
climate and energy policy objectives?   

EQ 13. How does the MF find synergies 
with other EU Funding Programmes 
(particularly the Recovery and 
Resilience Fund, Cohesion Policy, the 
Innovation Fund, Social and Climate 
Fund, Just Transition Fund) in achieving 
EU Policy Objectives? 

EQ 13.1 How does the MF operate in 
synergy with the Just Transition Fund in 
achieving EU Policy Objectives? 

The operating rules around PIs (use of at 
least 80% of original and transfer 
allowances, and 90% new allowance 
revenues for PIs and no more than 20% of 
allowance revenues for NPIs) and their 
delineation align with the internal goals of 
the Fund, such as enabling effective 
investments in key priority areas.  

The operating rules around PIs (use of at 
least 80% of original and transfer 
allowances, and 90% new allowance 
revenues for PIs and no more than 20% of 
allowance revenues for NPIs) and their 
delineation align with the key EU policy 
objectives such as climate neutrality by 
2050, the EGD, REPowerEU, and the Fit-
for-55 packages. 

MF and JTF complement each other in 
achieving EU-wide climate and energy 
objectives, including decarbonization and 
renewable energy deployment. 
MF and JTF investments are managed in a 
way to create synergies and prevent 
duplication of efforts. 

Number or disbursements on PIs directly 
contributing to the objectives of the fund. 
Number of NPIs contributing to the 
objectives of the fund. 
Level of coherence between the PIs and the 
objectives of the MF. 

Number or disbursements on PIs directly 
contributing to the objectives of the EU 
climate and energy policy. 
Number of NPIs contributing to the 
objectives of the EU climate and energy 
policy. 

Proportion of MF investments in sectors and 
regions that overlap with JTF objectives, 
such as energy transition, job creation, and 
support for vulnerable communities. 
Areas/sectors of conflicts and 
inconsistencies between the TJTPs and MF 
investments. 
Evidence of coordination between MF and 
JTF at the national, regional, or local levels. 

EQ 13.2 How does the MF operate in 
synergy with the Cohesion Policy Funds (in 
particular ERDF/CF/ESF+) in achieving EU 

MF and Cohesion Policy Funds complement 
each other in achieving EU-wide climate and 
energy objectives, including decarbonization 

Proportion of MF investments that overlap 
with the Cohesion Policy Funds objectives, 
such as energy, energy efficiency, low-

81 

 
 
 
EQ  

Sub-EQ 

Policy Objectives? 

EQ 13.3 How does the MF operate in 
synergy with the Recovery and Resilience 
Fund (RRF) in achieving EU Policy 
Objectives? 

EQ 13.4 How does the MF operate in 
synergy with the Social Climate Fund (SCF) 
in achieving EU Policy Objectives? 

EQ 13.5 How does the MF operate in 
synergy with the Innovation Fund (IF) in 
achieving EU Policy Objectives? 

Judgement criterion 

Indicators 

and renewable energy deployment. 
MF and Cohesion Policy Funds are managed 
in a way to create synergies and prevent 
duplication of efforts. 

MF and RRF complement each other in 
achieving EU-wide climate and energy 
objectives, including decarbonization and 
renewable energy deployment. 
MF and RRF investments are managed in a 
way to create synergies and prevent 
duplication of efforts. 

MF and SCF complement each other in 
achieving EU-wide climate and energy 
objectives, in particular in the area of 
supporting low-income households. 
MF and SCF investments are managed in a 
way to create synergies and prevent 
duplication of efforts. 

MF helps to further develop projects (e.g. on 
break-through technologies) that were 
supported by the IF in an earlier stage, while 
supporting EU climate and energy 
objectives. 
MF and IF investments are managed in a 
way to create synergies and prevent 

82 

carbon transport etc. 
Areas/sectors of conflicts and 
inconsistencies between the Cohesion Policy 
Funds and MF investments. 
Evidence of coordination between MF and 
Cohesion Policy Funds Managing 
Authorities. 

Proportion of MF investments in sectors that 
overlap with RRF objectives. 
Areas/sectors of conflicts and 
inconsistencies between the RRF and MF 
investments. 
Evidence of coordination between MS 
managing authorities of the RRF and the MS 
managing authority of the MF. 

Proportion of MF investments in sectors that 
overlap with SCF objectives. 
Areas/sectors of conflicts and 
inconsistencies between the SCF and MF 
investments. 
Evidence of coordination between MS 
managing authorities of the SCF and the MS 
managing authority of the MF. 

Number of innovative projects promoted by 
the IF, that were in a later stage supported by 
the MF. 
Evidence of coordination between the MS 
national contact points for the IF and the 
managing authorities of the MF. 

 
EQ  

Sub-EQ 

EQ 13.6 How does the MF operate in 
synergy with the InvestEU Fund in 
achieving EU Policy Objectives? 

Judgement criterion 

duplication of efforts.  

Indicators 

MF and InvestEU complement each other in 
achieving EU-wide climate and energy 
objectives, including decarbonization and 
renewable energy deployment. 
MF and InvestEU investments are managed 
in a way to create synergies and prevent 
duplication of efforts. 

Proportion of MF investments in sectors that 
overlap with InvestEU objectives. 
Areas/sectors of conflicts and 
inconsistencies between the InvestEU and 
MF investments. 
Evidence of coordination between MS 
managing authorities of InvestEU and the 
MS managing authority for the MF. 

83 

 
 
 
 
Sub-EQ 

Judgement criterion 

Indicators 

EU added value 

EQ  

EQ 14. To what extent has 
support from the Modernisation 
Fund allowed the realization of 
the supported projects? Would 
projects have happened without 
MF support? 

EQ14.1 To what extent has the EU-level 
support of the Modernisation Fund 
allowed the realization of the supported 
investment proposals?  To what extent 
has it allowed the beneficiary MSs to 
secure investments and implement 
projects in the MF priority sectors 

EQ14.2 Would the investment 
proposals/implemented projects in both 
priority and non-priority sectors have 
happened without MF support? 

EQ 15. Could the projects be 
supported by MS without the EU 
intervention? 

EQ15.1 Could the projects be supported 
by MSs private and public funding 
without the EU intervention through the 
MF / other EU ETS revenues 

MF funding has set the conditions to enable the beneficiary MSs 
to submit successful investment proposals and materialise 
project particularly in priority sectors projects to materialise 
through successful investment proposals 

Number of successful investment 
proposals/ implemented projects in 
priority sectors 
Conditions allowing MSs to submit 
successful proposals 

Without MF support, the MSs would not have proceeded in 
submitting investment proposals and projects would have not 
been implemented or would have been implemented at limited 
scale and/or at a slower pace. (MF mitigating delays, challenges, 
and risks related to finance and regulatory barriers) 

Without MF support, the investment would not have been 
implemented, and/or would not have been implemented at the 
same scale and/or at a slower pace (MF’s role in complementing 
and enhancing the available financial support landscape through 
other EU funding instruments, national private and public 
funds). 
Without MF support, the investment would have been 
implemented through other EU ETS revenues, following a 
different governance structure 

Evidence of MF mitigating delays 
in MSs investments in priority 
sectors 
Evidence of MF mitigating risks 
related to financing interventions in 
priority sectors 
Evidence of MF mitigating 
regulatory and administrative 
barriers in proceeding with 
investments in priority sectors 

Evidence of MF complementing 
and enhancing the available private 
and public funding at national level 
Evidence of MF complementing 
and enhancing other EU funding 
mechanisms 
Evidence of MF route being chosen 
by MS over other EU ETS revenue 
support 

84 

 
 
 
 
 
ANNEX IV. OVERVIEW OF BENEFITS AND COSTS AND TABLE ON SIMPLIFICATION AND BURDEN REDUCTION 

Type of cost/benefit 

Costs 
Direct costs 

Type: 
one-off 
or 
recurrent 

Recurrent 

Table 1. Overview of costs and benefits identified in the evaluation 
EU level (Commission and EIB) 

Beneficiary Member States 

Businesses (end-beneficiaries) 

Quantitative 

Comment 

Quantitative 

Comment 

Quantitative 

Comment 

/ 

/ 

Fund investments from 
MF, planned and 
disbursed 

/ 

EUR 35.4 billion in 
planned support 
from MF, of which 
EUR 15.4 billion 
disbursed (cut-off 
date mid-2025) 

Administrative costs 

Recurrent  245 FTEs or EUR 

5.7 million 
(annually) 

This includes the 
costs of 
development and 
submission of 
investment 
proposals, and 
implementation of 
the approved 
investments. 

1.75 FTEs or EUR 
0.19 million 
(annually) for the 
Commission 

EUR 13 million for 
EIB (annually) 
based on fees.  

For the EIB, tasks 
include assessment and 
confirmation of 
investments, technical 
and financial due 
diligence, organisation 
of IC work, 
communication with 
Member States, tasks 
related to auctioning 
and asset management, 
disbursement of funds 

The average number of 
staff members involved 
in preparing the 
application per 
respondent was 5 and 
around 10 days on 
average were 
spent (124). Insufficient 
data unable to derive a 
monetary estimate of 
resources spent on 

For NPI 
investments, 30% 
private co-
financing is 
mandatory, 
however, lacking 
data quality limits 
quantification 

In preparing a 
proposal, a large 
share of efforts 
was dedicated to 
preparing 
technical and 
financial 
documentation. 
End beneficiaries 
did not provide 
data on other 
processes such as 

(124) Data is based on the end beneficiaries survey, where respondents could choose ranges. 28% of end beneficiaries chose ‘1-2 staff members’, 40% of end beneficiaries – ‘3-5 staff members’, 19% of end beneficiaries – ‘6-10 staff 
members’, and 12% of end beneficiaries – ‘more than 10 staff members’. For calculating the average number of staff, we took an average of each range (e.g. 1.5 staff members for the range ‘1-2 staff members etc.), for ‘more 
than 10 staff members’, we used a conservative number of 11 staff members (total number of respondents – 165).  

85 

 
 
 
 
 
 
 
 
 
 
 
 
Type of cost/benefit 

Type: 
one-off 
or 
recurrent 

Table 1. Overview of costs and benefits identified in the evaluation 
EU level (Commission and EIB) 

Beneficiary Member States 

Businesses (end-beneficiaries) 

Quantitative 

Comment 

Quantitative 

Comment 
and other. 

Quantitative 
project implementation. 

Comment 
implementation, 
monitoring and 
reporting.  

Enforcement costs: 
(costs associated with 
activities linked to the 
implementation of an 
initiative such as 
monitoring, 
inspections and 
adjudication/litigation) 

Indirect costs 
(indirect compliance 
costs or other indirect 
costs such as 
transaction costs) 

Recurrent 

71 FTEs or EUR 
1.7 million 
(annually) 

This includes the 
costs of 
monitoring 
implementation of 
the financed 
investments. 

Included in the 
numbers above, not 
assessed separately, 
as there was not 
enough data to 
separate by type of 
task/activity. 

N/A 

N/A 

N/A 

N/A 

N/A 

86 

The administrative 
burden of complying 
with monitoring by MS 
was estimated by end 
beneficiaries as either 
moderate (41% of 
respondents) or very 
significant (35%). 
Insufficient data was 
available to 
quantitatively estimate 
monitoring and 
reporting costs. 
N/A 

N/A 

 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits 

Investments 

Recurrent 

Quantitative 

Comment 

Quantitative 

Comment 

Quantitative 

Comment 

Direct benefits 

N/A 

N/A 

N/A 

N/A 

Total investments 
EUR 69.1 billion, of 
which EUR 35 billion 
in total planned MF 
support, and EUR 15 
billion disbursed (cut-
off date end of 2024) 

BMS combine the 
MF support with 
additional State 
aid, other EU 
funding schemes 
and private 
investments, 
making the total 
investment larger 
than the MF 
contribution  

Energy savings 
(expressed in MWh – 
through MF-funded 
investments by year 
end and over the full 
lifetime of the 
investment, expected 
based on Annual 
Reports) 
Greenhouse gas 
emissions savings 
(expressed in tCO₂eq 
– by year end and 
over the full lifetime 

One-off 

5.15 million 
MWh (by year 
end) 

Recurrent 

One-off 

1.15 billion MWh 
(lifetime) 
2.55 million 
tCO₂eq (by year 
end) 

Recurrent 

837 million 

Indirect benefits: wider environmental impacts: 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

87 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
tCO₂eq (lifetime) 

One-off 

777.74 MW (by 
year end) 

N/A 

Recurrent 

25 GW (lifetime) 

of the investment, 
expected based on 
Annual Reports) 
Renewable energy 
capacity installed 
(expressed in MW – 
by year end and over 
the full lifetime of the 
investment, expected 
based on Annual 
Reports) 

N/A 

N/A 

N/A 

N/A 

Type of cost saving 

Administration in beneficiary Member States 

Administration - EU level (Commission 
and EIB) 

Businesses (end beneficiaries) 

Quantitative 

Comment 

Quantitative 

Comment 

Quantitative 

Comment 

TABLE 2:  Simplification and burden reduction  

PART I: Savings already achieved 
Direct compliance cost savings (adjustment cost savings) 
Recurrent 

Simplification and 
burden reduction 
measure were not 
quantitatively assessed 
due to insufficient data. 

The revision of the MF 
Implementing Act in 
2023 relaxed the 
timeline for 
implementation of 
Funds by beneficiary 
Member States on the 
ground: within two 
years of disbursement 
from the EIB, the 
beneficiary MS no 
longer have to disburse 

N/A 

N/A 

N/A 

N/A 

88 

 
 
 
 
 
 
 
TABLE 2:  Simplification and burden reduction  

Administration - EU level (Commission 
and EIB) 

Businesses (end beneficiaries) 

Quantitative 

Comment 

Quantitative 

Comment 

Type of cost saving 

Administration in beneficiary Member States 

Quantitative 

Recurrent 

Simplification and 
burden reduction 
measure were not 
quantitatively assessed 
due to insufficient data. 

Comment 
payments to final 
beneficiaries, but it is 
enough that they 
contract some amount 
with final beneficiaries. 
If they do not, the 
investment is classified 
as discontinued. 
Introduction of 
stakeholder 
consultation early 
enough in the process 
of developing 
investment pipelines 
(strong potential to 
reduce adjustment costs 
down the line, as 
investments are more 
aligned with market 
expectations)   

N/A 

N/A 

Part II: Potential simplification and burden reduction (savings) 
Direct compliance cost savings 

Recurrent 

Simplification and 
burden reduction 
measures were not 
quantitatively assessed 
due to insufficient data. 

Reduction of time to 
disbursement to end 
beneficiaries by 
Member States. 

N/A 

N/A 

89 

Introduction of 
stakeholder 
consultation early 
enough the process of 
developing investment 
pipelines (strong 
potential to reduce 
adjustment costs down 
the line, as 
investments are more 
aligned with market 
expectations)   

Reduction of time to 
disbursement to end 
beneficiaries by 
Member States. 

Simplification 
and burden 
reduction 
measure were 
not 
quantitatively 
assessed due to 
insufficient 
data. 

Simplification 
and burden 
reduction 
measures were 
not 
quantitatively 
assessed due to 

 
 
Type of cost saving 

Administration in beneficiary Member States 

Administration - EU level (Commission 
and EIB) 

Businesses (end beneficiaries) 

TABLE 2:  Simplification and burden reduction  

Quantitative 

Comment 

Quantitative 

Comment 

Quantitative 
insufficient 
data. 

Comment 

Recurrent 

Simplification and 
burden reduction 
measures were not 
quantitatively assessed 
due to insufficient data. 

Recurrent 

Simplification and 
burden reduction 
measures were not 
quantitatively assessed 
due to insufficient data. 

Digitalisation of 
process could reduce 
the burden for end 
beneficiaries 
(mentioned by 8.5% of 
respondents to end 
beneficiaries survey), 
streamlining 
documentation and 
simplifying reporting 
(5.4%), clearer 
guidance and better 
communication (2.4%). 

Increasing the 
frequency of 
disbursement cycles / 
shortening approval 
cycle (leads to faster 
approvement of 
investments) 

Simplification 
and burden 
reduction 
measures were 
not 
quantitatively 
assessed due to 
insufficient data 

Simplification 
and burden 
reduction 
measures were 
not 
quantitatively 
assessed due to 
insufficient 
data. 

Digitalisation of process 
could reduce the burden 
for end beneficiaries 
(mentioned by 8.5% of 
respondents to end 
beneficiaries survey), 
streamlining 
documentation and 
simplifying reporting 
(5.4%), clearer guidance 
and better 
communication(2.4%). 

Digitalisation of 
process could reduce 
the burden for end 
beneficiaries 
(mentioned by 8.5% 
of respondents to end 
beneficiaries survey), 
streamlining 
documentation and 
simplifying reporting 
(5.4%), clearer 
guidance and better 
communication 
(2.4%). 

N/A 

N/A 

Simplification 
and burden 
reduction 
measures were 
not 
quantitatively 
assessed due to 

Increasing the 
frequency of 
disbursement cycles / 
shortening approval 
cycle (leads to faster 
approvement of 
investments) 

90 

 
 
 
 
 
 
 
Type of cost saving 

Administration in beneficiary Member States 

Administration - EU level (Commission 
and EIB) 

Businesses (end beneficiaries) 

TABLE 2:  Simplification and burden reduction  

Enforcement cost savings 
One-off 

Quantitative 

Comment 

Quantitative 

Comment 

N/A 

N/A 

Simplification and 
burden reduction 
measures were not 
quantitatively assessed 
due to insufficient data. 

Streamlining of 
reporting obligations 
for end beneficiaries, 
depending on the size 
of the project and share 
of the MF fundings. 
Requirements to vary 
across Member States, 
so would have to be 
country-by-country 

Quantitative 
insufficient 
data. 

Simplification 
and burden 
reduction 
measures were 
not 
quantitatively 
assessed due to 
insufficient 
data. 

Comment 

Streamlining of 
reporting obligations 
for end beneficiaries, 
depending on the size 
of the project and 
share of the MF 
fundings. 
Requirements to vary 
across Member States, 
so would have to be 
country-by-country. 

91 

 
 
 
 
ANNEX V. STAKEHOLDERS CONSULTATION - SYNOPSIS REPORT  

1.  Recap of consultation activities 

The Consultation strategy included the following items: 

•  44 semi-structured interviews were conducted with selected stakeholders to provide granular information on all evaluation criteria, and to cover gaps that  have 
been  identified  in  the  desk  review.  The  interviews  covered  European  Commission  representatives  (CLIMA,  REFORM,  COMP);  European  Investment  Bank 
representatives from the Investment Committee and the team engaged in the implementation of the MF; all beneficiary Member States and all non-beneficiary IC 
members  (Germany,  the  Netherlands,  Sweden);  five  civil  society  organisations;  five  trade  organisations,  and  ten  representatives  with  scheme  coordinators/end 
beneficiaries associated with implemented investments to inform the case studies.   

Table 1 Overview of interviews conducted 

Stakeholder Category 

Stakeholders 

Number of Interviews 

European Commission 
European Investment Bank 
Beneficiary Member States 

Non-beneficiary Member States in 
the IC 
Civil society organisations 
Trade organisations 

Coordinators (for schemes) or end 
beneficiaries (for individual projects 
or projects under schemes) 
Total 

DG CLIMA, DG REFORM, DG COMP 
IC representative, MF secretariat, investment review team 
Bulgaria, Croatia , Czechia, Estonia, Greece, Hungary, Lativa, Lithuania, Poland, Portugal, Romania, Slovakia, 
Slovenia 
Germany, the Netherlands, Sweden 

WWF, Bankwatch, AMO Klima, REScoop, Friends of the Earth Slovakia 
Eurelectric, International Association of Public Transport (UITP), Renewable Energy Sources of Croatia (RES 
Croatia), European Renewable Energies Federation (EREF), Romanian Energy Center (CRE) 
Ministry of Environment Lithuania, State Environmental Fund Czechia (2), Ministry of Environment Slovakia, 
Ministry of Economy and Sustainable Development Croatia, National Fund for Environmental Protection and 
Water Management Poland, CEMEX Croatia, Transgaz Romania, Slovnaft Slovakia, PGE Poland 

3 
3 
14 

3 

5 
5 

10 

44 

•  A  targeted  survey  of  all beneficiary  Member  States.  The targeted survey  gathered information  (e.g.  on  administrative burden and  costs)  as  well  as  views  of 
Member States on the implementation of the Fund. 15 responses, covering all beneficiary Member States; in Estonia (Ministry of Finance and Ministry of Climate) 
and Romania (Ministry of Transport and Ministry of Energy), replies were provided by two ministries involved in managing the MF. When quantifying the replies 

92 

 
from  the  Member  States  to  the  survey,  only  the  opinion  of  the  public  authority  who  is  represented  in  the  Fund’s  IC  was  taken  into  consideration.  However, 
qualitative comments from all public authorities were considered.   

•  A targeted survey of end beneficiaries.  The targeted survey received 165 responses, from nine beneficiary Member States, namely Bulgaria (4), Croatia (26), 
Czechia (56), Estonia (2), Hungary (6), Lithuania (5), Poland (23), Romania (37), and Slovakia (6). This variation is partly a reflection of the size of national MF 
portfolios and the number of targeted beneficiaries (e.g. fewer large industry installations vs. many private households), but may also reflect different levels of 
outreach, availability of contact data, or willingness to participate. 

•  A targeted questionnaire of other organisations. The targeted survey gathered feedback from civil society organisations, trade organisations and other relevant 
stakeholders concerning, amongst others, the relevance and transparency of the Fund. 19 responses from eight beneficiary Member States were received, namely 
Belgium  (7),  Bulgaria  (2),  Czechia  (1),  Greece  (1),  Hungary  (1),  Latvia  (1),  Poland  (1),  Romania  (4),  and  Slovakia  (1).  The  concentration  of  respondents  in 
Belgium  is  a  result  of  the  presence  of  several  trade  organisations,  NGOs  and  civil  society  organisations  with  their  European  headquarters  in  Brussels.  The 
respondents included trade organisations (5), and NGOs/civil society organisations (11). 

•  A  call  for  evidence  without  further  public  consultation,  was  published  on  the  ‘Have  your  say’  portal  in  all  24  official  EU  languages  and  remained  open  for 
feedback for 6 weeks (14 April 2025 - 26 May 2025). 44 respondents replied. Most responses (19) came from companies, predominantly (13) in the energy sector 
and heavy industry (5).  14 responses came from non-governmental organisations (NGOs) and seven from business associations (seven in energy sector, one in 
heavy  industry).  There  were  three  responses  from  individual  citizens  (two  EU  and  one  non-EU),  and  one  response  from  a  public  authority  (Ministry  of 
Environment of the Czechia). 

2.  Call for Evidence: 

The Call for Evidence for the Evaluation of the Modernisation Fund (MF), without further public consultation, was published on the ‘Have your say’ 
portal (125) in all 24 official EU languages (126 and remained open for feedback for 6 weeks (14 April 2025-26 May 2025). Feedback was sought on the 
five evaluation criteria. Relevant trade associations, potential and actual end beneficiaries, as well as broader stakeholders, were encouraged to contribute. 
The consultation was promoted through the European Commission’s website, the MF website, social media, and by contacting with the stakeholders on 
the MF’s regular contact list. 

125

126

 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/14305-Modernisation-Fund-first-evaluation-of-the-operating-rules_en 

 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/14305-Modernisation-Fund-first-evaluation-of-the-operating-rules_en 

93 

 
 
Given the number of stakeholders of the MF, due to its specific governance model, many stakeholders were consulted through interviews and surveys. 
The Call for Evidence enabled the consultation activities to extend beyond the usual stakeholder group and to reach those stakeholders, who could not be 
specifically  interviewed.  In  this  context,  it  was  not  deemed  necessary  to  conduct  an  open  public  consultation.  The  Fund  does  not  maintain  a  detailed 
record  of  all  applicants,  as  selection  process  is  conducted  entirely  at  the  Member  State  level.  Consequently,  sharing  the  perspectives  of  unsuccessful 
applicants  in  a  comprehensive  and  quantifiable  manner  proves  challenging,  as  the  selection  procedure  is  decentralised,  with  such  data  unavailable. 
However, non-beneficiaries had the opportunity to express their views through the call for evidence.44 respondents replied to the CfE, with 44 unique 
responses. The majority of responses (19) came from companies (43%), predominantly (13) in the energy sector and heavy industry (5). 14 responses 
(32%) came from non-governmental organisations (NGOs) and 7 (16%) from business associations (7 in energy sector, 1 in heavy industry). There were 
three  responses  (7%)  from  individual  citizens  (two  EU  and  one  non-EU),  and  one  response  from  a  public  authority  (Ministry  of  Environment  of  the 
Czech Republic). The distribution across categorisation of respondents is illustrated in  Figure 1. A more detailed distribution of the sectors of industry 
stakeholders (companies and business associations) and NGOs is illustrated in Figure 2. 

Figure 1 Category of respondents 

1 1

2

Company/business
organisation

NGO

Business association

7

19

EU citizen

Non-EU citizen

Public authority

14

94 

 
 
 
Figure 2 Categorisation of stakeholders per sector 

Business
association Energy
sector

Business
association Heavy
industry

Company Energy
sector

Company Heavy
industry

Company  Other

4

1

6

8

1

5

1

13

The respondents to the CfE are located in 15 countries: 14 Member States and one third country, Turkey. A majority of the respondents are from Member 
States: 11 respondents from Belgium, and nine from Poland. Hungary and Czechia had four respondents each. From the following countries, there were 
two respondents  from  each:  Romania, Portugal, Croatia, Spain,  and Austria. Finally,  from  France, Greece, Lithuania, Slovakia, Slovenia, and Turkey, 
there was one respondent from each Member State. 

Overall findings per stakeholder groups 

Overall, the three main stakeholder groups expressed the following assessment of the MF:  

Non-governmental  organizations  (NGOs)  focusing  on  environmental  issues  generally  have  a  positive  view  on  the  MF.  However,  several  NGOs 
expressed ongoing concerns about the continued financing of fossil fuel projects (4 NGOs) and biomass power plants under the  MF (6 NGOs). NGOs 
advocate for a greater emphasis on renewable energies, including grid improvements (1), public transportation, carbon-neutral transportation (1), and to 
increase the social aspect of the transition, including building renovations and clean heating (5). They also find that the MF complements both the Social 
Climate Fund and the Just Transition Fund. 

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Companies recognize the importance of the MF as a key EU financial tool for accelerating the energy transition in lower-income Member States. They 
support  the  continuation  of  the  MF  beyond  2030  and  advocate  for  greater  flexibility,  simplified  procedures,  and  expanded  eligibility  criteria.  This 
includes  six  companies  explicitly  mentioning  support  for  non-energy  sectors;  comparable  for  renewable  energy  sources  (4),  nuclear  options  (2),  and 
regions  that  have  been  overlooked  by  other  EU  support  schemes  (3).  Four  companies  additionally  emphasise  the  need  for  clearer  recognition  and 
prioritisation of sectors that face significant challenges in decarbonization, such as steel, cement, and chemicals. Furthermore, they stress the importance 
of  improved  integration  with  other  EU  instruments  and  the  necessity  for  more  predictable  and  transparent  access  to  funding.  Timely  information  is 
essential to help companies invest in long-term projects effectively. 

Business associations generally support the MF as a mean to decarbonise energy systems in lower-income Member States. However, they also call for 
improvements in its design and operation. Their main recommendations include extending the Fund's duration beyond 2030, enhancing the transparency 
and predictability of funding, and simplifying administrative procedures. Additionally, several business associations advocate for expanding eligibility to 
cover a wider range of technologies, such as industrial decarbonisation (4), geothermal energy (3), and low-carbon technologies like carbon capture and 
storage (CCS) (2) and hydrogen (1). These business associations act on behalf of their constituencies’ activity types and emphasize the need for more 
flexibility  in  financing  mechanisms  as  well  as  retroactive  funding  for  early-stage  costs.  Furthermore,  they  advocate  for  the  importance  of  prioritising 
high-impact, large-scale projects. 

Three  companies  and  one  NGO  argue  that  the  MF’s  scope  could  be  expanded  to  also  involve  supporting  just  transition  efforts  in  regions  that  have 
historically been dependant on coal but were excluded from the Just Transition Fund (JTF). For example, in Polish regions, Industry stakeholders argue 
that  some  coal-dependent  Member  States  face  much  higher  decarbonisation  costs,  which  aren't  fully  addressed  by  current  EU  funding  under  the  Just 
Transition Mechanism (JTM). They ask for additional resources and flexibility under the MF for those not included in the JTF despite heavy reliance on 
coal. 

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