CELEX: 
Language: en
Date: 2020-07-09 00:00:00
Title: COMMISSION IMPLEMENTING REGULATION (EU) …/... 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

EUROPEAN
                            COMMISSION
                                                     Brussels, 9.7.2020
                                                     C(2020) 4541 final
               COMMISSION IMPLEMENTING REGULATION (EU) …/...
                                         of 9.7.2020
   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
EN                                                                                        EN
 ---pagebreak---                   COMMISSION IMPLEMENTING REGULATION (EU) …/...
                                                of 9.7.2020
     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
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union,
   Having regard to Directive 2003/87/EC of the European Parliament and of the Council of 13
   October 2003 establishing a system for greenhouse gas emission allowance trading within the
   Union and amending Council Directive 96/61/EC1, and in particular Article 10d(12) thereof,
   Whereas:
   (1)     Directive 2003/87/EC establishes the Modernisation Fund for the period from 2021 to
           2030, to support investments in modernising energy systems and improving energy
           efficiency in certain Member States. As stated in the Communications from the
           Commission entitled ‘The European Green Deal’2 and ‘The European Green Deal
           Investment Plan’3, the implementation of the Modernisation Fund should contribute to
           the attainment of the objectives of the European Green Deal, by supporting green and
           socially just transition.
   (2)     Detailed rules on the operation of the Modernisation Fund should be laid down to
           allow for smooth distribution of its financial resources to the beneficiary Member
           States, in particular by laying down procedures for submission and assessment of
           investment proposals and for disbursement of the Fund revenues.
   (3)     In order to ensure the compatibility of the financing under the Modernisation Fund
           with the internal market, beneficiary Member States should notify the Commission, in
           accordance with Article 108(3) of the Treaty, of any planned investment constituting
           State aid within the meaning of Article 107(1) of the Treaty and that would not be
           covered by an existing approved or exempted aid scheme or an individual decision.
           The assessment of investments covered by the Fund should be coordinated with the
           State aid assessment, and the modalities of submission of investment proposals should
           take into account the modalities of submission of State aid notifications. The
           disbursement of the revenues from the Fund should depend on State aid clearance.
   (4)     ‘The European Green Deal’ envisages territorial just transition plans as a cornerstone
           of the Just Transition Mechanism. When an investment under the Modernisation Fund
           aims at implementation of a territorial just transition plan of the beneficiary Member
   1
           OJ L 275, 25.10.2003, p. 32.
   2
           Communication from the Commission to the European Parliament, the European Council, the Council,
           the European Economic and Social Committee and the Committee of the Regions ‘The European Green
           Deal’, COM(2019) 640 final of 11 December 2019.
   3
           Communication from the Commission to the European Parliament, the European Council, the Council,
           the European Economic and Social Committee and the Committee of the Regions ‘The European Green
           Deal Investment Plan’, COM(2020) 21 final of 14 January 2020.
EN                                                     1                                                    EN
 ---pagebreak---         State, that Member State should provide information about the expected contribution
        of the investment to that plan, with a view of supporting coherence and
        complementarity with the objectives of the plan.
   (5)  Beneficiary Member States should regularly inform the European Investment Bank
        (EIB) and the Investment Committee for the Modernisation Fund (‘Investment
        Committee’) of the planned investments to facilitate the planning of disbursement and
        management of the resources from the Modernisation Fund. However, that
        information should not bind the beneficiary Member States when submitting future
        investments proposals.
   (6)  A simplified procedure for disbursement of the Fund revenues should apply to
        investments in the priority areas listed in Article 10d(2) of Directive 2003/87/EC
        (‘priority investments’). Non-priority investments should undergo a comprehensive
        assessment of their technical and financial viability and their added value to the Fund
        objectives.
   (7)  Pursuant to Article 10d(2) of Directive 2003/87/EC, at least 70% of the financial
        resources from the Modernisation Fund are to be allocated to priority investments. To
        ensure fair distribution of the financial resources across all beneficiary Member States,
        that requirement should apply to the individual share in the Fund of each beneficiary
        Member State.
   (8)  The financing of investments from the Modernisation Fund should depend on the
        availability of the funds at disposal of the beneficiary Member State and the
        proportion of funds allocated to priority investments. In order to enable close
        monitoring of allocation of the funds, while ensuring efficiency of the disbursement
        process, the assessment of the investment proposals by the EIB or, as appropriate, by
        the Investment Committee, and disbursement of the funds by the Commission should
        be organised in biannual cycles.
   (9)  The procedures for the operation of the Modernisation Fund should take into account
        the specificities of schemes submitted by the beneficiary Member States. Once the
        EIB confirms the scheme as a priority investment or, as appropriate, the Investment
        Committee recommends the financing of the scheme in the non-priority area, and once
        the Commission decides on the first disbursement of the funds for the scheme, the
        beneficiary Member State should submit a new proposal for any subsequent
        disbursement. For the purpose of any such subsequent disbursement, the confirmation
        by the EIB or, as appropriate, the recommendation by the Investment Committee
        should be limited to verification of the availability of the funds at disposal of the
        beneficiary Member State, and in respect of schemes that qualify as non-priority
        investments, verification of compliance with the thresholds for the permissible support
        specified in Article 10d(2) and the fourth sentence of the second subparagraph of
        Article 10d(6) of Directive 2003/87/EC. Furthermore, simplified rules should apply to
        the annual reporting on schemes by the beneficiary Member States.
   (10) Discontinued investments should not receive further financing from the Modernisation
        Fund. Any amounts already paid to discontinued investments but not yet consumed by
        such investments should be made available for the financing of other investments.
   (11) Detailed rules should be laid down regarding the composition and operation of the
        Investment Committee.
   (12) Pursuant to Article 10d(3) of Directive 2003/87/EC, the EIB is to manage the revenues
        from the Modernisation Fund. For this purpose, the EIB should develop asset
EN                                                2                                               EN
 ---pagebreak---           management guidelines which support the objectives of the Directive and which take
          account of the internal rules of the EIB. In addition, the EIB is to carry out other tasks
          related to the implementation of the Modernisation Fund, as laid down in Directive
          2003/87/EC. The specific terms and conditions for carrying out those tasks should be
          laid down in an agreement between the Commission and the EIB. The mechanism for
          the recovery of costs of the EIB should correspond with those tasks, and it should also
          take into account the number and complexity of investment proposals submitted by
          respective beneficiary Member States, and whether the proposals concern priority or
          non-priority investments.
   (13)   Where Member States decide to use the revenues generated from the auctioning of
          allowances to finance their expenses related to implementation of the Modernisation
          Fund, such expenses could qualify as administrative expenses referred to in Article
          10(3)(i) of Directive 2003/87/EC, and therefore they might count towards the 50%
          objective of climate-related use of the auctioning revenues.
   (14)   Clear monitoring and reporting arrangements should be laid down to provide the
          Commission with complete and timely information on the progress of particular
          investments and overall implementation of the Modernisation Fund.
   (15)   The measures provided for in this Regulation are in accordance with the opinion of the
          Climate Change Committee,
   HAS ADOPTED THIS REGULATION:
                                             CHAPTER I
                                     GENERAL PROVISIONS
                                               Article 1
                                           Subject matter
   This Regulation lays down detailed rules on the operation of the Modernisation Fund as
   regards the following:
   (a)      submission of proposals for financing of investments;
   (b)      assessment of priority investments and non-priority investments;
   (c)      management, disbursement and payment of the resources from the Modernisation
            Fund;
   (d)      composition and operation of the Investment Committee for the Modernisation Fund
            (‘Investment Committee’);
   (e)      monitoring, reporting, evaluation, and auditing;
   (f)      information and transparency.
                                               Article 2
                                             Definitions
   For the purposes of this Regulation the following definitions apply:
   (1)      ‘beneficiary Member State’ means a Member State listed in Annex IIb to Directive
            2003/87/EC;
EN                                                 3                                                 EN
 ---pagebreak---    (2)   ‘non-priority investment’ means an investment that does not fall into any area listed
        in Article 10d(2) of Directive 2003/87/EC;
   (3)  ‘non-priority small-scale project’ means a non-priority investment receiving State aid
        the total amount of which meets the criteria of the de minimis aid in accordance with
        Article 3 of Commission Regulation (EU) No 1407/20134;
   (4)  ‘priority investment’ means an investment that falls into at least one area listed in
        Article 10d(2) of Directive 2003/87/EC;
   (5)  ‘scheme’ means an investment proposal which complies with the following criteria:
        (a)    it comprises a consistent set of priorities coherent with the objectives of the
               Modernisation Fund, and because of the characteristics of the projects under
               the scheme, it can be qualified either as a priority or non-priority investment;
        (b)    it has a duration of more than one year;
        (c)    it has a national or regional scope; and
        (d)    it aims to support more than one public or private person or entity responsible
               for initiating or initiating and implementing projects under the scheme.
                                            CHAPTER II
                               FINANCING OF INVESTMENTS
                                              Article 3
                                     Overview of investments
   1.   By 30 November of each year, each beneficiary Member State shall provide the
        European Investment Bank (EIB) and the Investment Committee with an overview of
        investments in respect of which it intends to submit investment proposals in the next
        two calendar years, as well as updated information on investments covered by any
        previous overview.
   2.   In the overview referred to in paragraph 1, the beneficiary Member State shall
        provide the following information about each planned investment:
        (a)    the name of the project proponent or the scheme managing authority;
        (b)    the specific location of the investment or the geographical scope of the scheme;
        (c)    an estimate of the total cost of the investment;
        (d)    the investment field and a summary description of the investment;
        (e)    the status of any State aid assessment concerning the investment, where
               applicable;
        (f)    an estimate of the financing from the Modernisation Fund and an outline of the
               intended financing proposals.
   3.   The information included in the overview shall not be binding for the beneficiary
        Member State when submitting investment proposals in accordance with Article 4.
   4
       Commission Regulation (EU) No 1407/2013 of 18 December 2013 on the application of Articles 107
       and 108 of the Treaty on the Functioning of the European Union to de minimis aid (OJ L 352,
       24.12.2013, p. 1).
EN                                                4                                                   EN
 ---pagebreak---                                           Article 4
                           Submission of investment proposals
   1. Beneficiary Member States may submit investment proposals to the EIB and the
      Investment Committee at any time during a calendar year.
      When submitting investment proposals, beneficiary Member States shall provide
      information specified in Annex I.
      The beneficiary Member State shall indicate whether the proposal concerns a priority
      investment or a non-priority investment.
   2. Where an investment concerns a scheme, beneficiary Member State shall submit a
      proposal in accordance with paragraph 1 and specify the amount requested as the
      first disbursement for the scheme.
      After the Commission has decided on the first disbursement to the scheme in
      accordance with Article 8(1), any subsequent disbursement shall require a separate
      proposal from the beneficiary Member State specifying the amount to be disbursed
      and containing the updated information about the scheme, as appropriate.
   3. Where the beneficiary Member State submits several investment proposals to be
      assessed in the same biannual disbursement cycle, it shall indicate a priority order for
      assessment of priority investments and a priority order for assessment of non-priority
      investments. If the Member State fails to indicate a priority order, the EIB or, as
      appropriate, the Investment Committee shall assess the proposals according to the
      dates of their submission.
   4. A proposal concerning a non-priority small-scale project may be submitted only as
      part of a scheme.
   5. The beneficiary Member State shall not request the financing from the resources of
      the Modernisation Fund of any costs of the investment which are financed by another
      Union or national instrument.
                                          Article 5
                                     Available funds
   1. Four weeks before the meeting of the Investment Committee referred to in Article
      11(1), the EIB shall inform the beneficiary Member State, the Investment Committee
      and the Commission about the funds available to that Member State to finance
      investments from the Modernisation Fund (‘statement of the available funds’).
   2. The statement of the available funds shall specify the following:
      (a)    the amount held with the EIB, excluding any amounts already disbursed but
             not yet paid to the Member State in accordance with Article 9, and excluding
             any costs of the EIB specified in the agreement referred to in Article 12(3);
      (b)    any amounts disbursed to discontinued investments which increase the
             resources in the Modernisation Fund available to the beneficiary Member State
             in accordance with Commission decision referred to in Article 10(2).
   3. The closing date of the statement of the available funds shall be the last day of the
      calendar month preceding the date of transmission of information in accordance with
      paragraph 1.
EN                                            5                                                EN
 ---pagebreak---    4. Without prejudice to paragraphs 1 to 3, the beneficiary Member State may request
      from the EIB information about the amount earmarked for that Member State held
      with the EIB at any given point in time.
                                             Article 6
                             Confirmation of priority investments
   1. Investment proposals submitted by the beneficiary Member States as priority
      investments shall be assessed by the EIB in the first biannual disbursement cycle of
      the calendar year, if submitted at least six weeks before the first biannual meeting of
      the Investment Committee referred to in Article 11(1).
      If submitted later than six weeks before the first biannual meeting of the Investment
      Committee referred to in Article 11(1), but at least six weeks before the second
      biannual meeting of the Committee, they shall be assessed in the second biannual
      disbursement cycle of the calendar year.
      If submitted later than six weeks before the second biannual meeting of the
      Investment Committee referred to in Article 11(1), they shall be assessed in the first
      biannual disbursement cycle of the following calendar year.
   2. The EIB may request from the beneficiary Member State any information or
      documents that it considers necessary to assess the investment, provided that such
      information or documents are required by Annex I. The EIB shall request the
      information or documents without undue delay. If the beneficiary Member State
      provides the requested information or documents less than six weeks before the
      meeting of the Investment Committee referred to in Article 11(1), the EIB may
      postpone the assessment of the proposal to the next biannual disbursement cycle.
   3. If the EIB is of the opinion that the proposal concerns a non-priority investment, the
      EIB shall inform thereof the beneficiary Member State not later than within four
      weeks from submission of the proposal, and state the reasons for its conclusion. In
      that case, the proposal shall be assessed in accordance with the requirements and
      timelines specified in Article 7.
   4. If the proposal does not comply with Article 10d(1) of Directive 2003/87/EC or the
      requirements of this Regulation, the EIB shall return the proposal to the beneficiary
      Member State not later than within four weeks from submission of the proposal, and
      state the reasons for its conclusion. The EIB shall forthwith inform the Investment
      Committee.
   5. The assessment of the proposal shall include verification of the costs of the proposed
      investment, unless the proportionality of the amount of aid received has been verified
      by the Commission under the relevant State aid procedure.
   6. The EIB shall assess the proposal respecting the applicable Union law.
   7. The EIB may confirm the proposal as a priority investment provided that the
      following conditions are met:
      (a)    the beneficiary Member State has demonstrated that the investment complies
             with the requirements laid down in Article 10d(1) of Directive 2003/87/EC and
             that it falls into at least one area listed in Article 10d(2) of that directive;
      (b)    the beneficiary Member State has sufficient funds available according to the
             statement of the available funds referred to in Article 5(1) and after deduction
EN                                               6                                            EN
 ---pagebreak---                of any amounts to be disbursed for investments already confirmed in
               accordance with paragraph 9 of this Article;
        (c)    the beneficiary Member State has provided evidence that the investment
               proposal fulfils either of the following requirements:
               –       obtained State aid clearance in accordance with the Commission
                       decision;
               –       is exempted from the State aid notification in accordance with
                       Commission Regulation (EU) No 651/20145;
               –       does not constitute State aid within the meaning of Article 107(1) of the
                       Treaty;
        (d)    the beneficiary Member State has confirmed in writing that the investment
               complies with any other applicable requirements of Union and national law;
        (e)    according to the information provided by the beneficiary Member State about
               contributions from other Union and national instruments, the amounts
               requested from the Modernisation Fund are not intended to cover the same
               costs of the investment as those financed by another Union or national
               instrument.
   8.   Where a proposal concerns a subsequent disbursement for a scheme confirmed by
        the EIB in accordance with paragraph 9 prior to the first disbursement, the
        assessment of the proposal by the EIB shall be limited to verification of the available
        funds in accordance with point (b) of paragraph 7, provided that there have been no
        changes to the scheme.
   9.   The EIB shall decide on confirmation of the proposal as a priority investment at the
        latest two weeks before the meeting of the Investment Committee referred to in
        Article 11(1).
        The EIB shall forthwith inform the beneficiary Member State concerned and the
        Commission about the decision referred to in the first subparagraph.
   10.  At the latest one week before the meeting of the Investment Committee referred to in
        Article 11(1), the EIB shall inform the Committee about the investment proposals of
        each beneficiary Member State confirmed as priority investments in accordance with
        paragraph 9 of this Article and the amount to be disbursed to each investment.
                                                Article 7
                         Recommendations on non-priority investments
   1.   The investment proposals submitted by the beneficiary Member States as non-
        priority investments shall be assessed by the Investment Committee in the first
        biannual disbursement cycle of the calendar year, if submitted at least 10 weeks
        before the first biannual meeting of the Investment Committee referred to in Article
        11(1).
        If submitted later than 10 weeks before the first biannual meeting of the Investment
        Committee referred to in Article 11(1), but at least 10 weeks before the second
   5
       Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid
       compatible with the internal market in application of Articles 107 and 108 of the Treaty (OJ L 187,
       26.6.2014, p. 1).
EN                                                  7                                                      EN
 ---pagebreak---       biannual meeting of the Committee, they shall be assessed in the second biannual
      disbursement cycle of the calendar year.
      If submitted later than 10 weeks before the second biannual meeting of the
      Investment Committee referred to in Article 11(1), they shall be assessed in the first
      biannual disbursement cycle of the following calendar year.
   2. At the latest two weeks before the meeting of the Investment Committee referred to
      in Article 11(1), the EIB shall complete a technical and financial due diligence
      assessment of the proposal, including an assessment of the expected emission
      reductions.
   3. The EIB may request from the beneficiary Member State any information or
      documents that it considers necessary to carry out the technical and financial due
      diligence assessment, provided that such information or documents are required by
      Annex I. The EIB shall request the information or documents without undue delay. If
      the beneficiary Member State provides the requested information or documents less
      than 10 weeks before the meeting of the Investment Committee referred to in Article
      11(1), the EIB may postpone the completion of the due diligence assessment to the
      next biannual disbursement cycle.
   4. The financial due diligence assessment by the EIB shall include verification of the
      costs of the proposed investment, unless the proportionality of the amount of aid
      received has been verified by the Commission under the relevant State aid procedure.
   5. The EIB shall carry out the due diligence assessment respecting the applicable Union
      law.
   6. The due diligence assessment by the EIB shall be accompanied by a statement of the
      EIB representative regarding the endorsement of the financing of the investment
      proposal. The EIB shall forthwith transmit the due diligence assessment to the
      Investment Committee.
   7. The Investment Committee may issue a recommendation on financing the investment
      proposal provided that the following conditions are met:
      (a)   the beneficiary Member State has demonstrated that the investment complies
            with the requirements laid down in Article 10d(1) of Directive 2003/87/EC;
      (b)   the beneficiary Member State has sufficient funds available according to the
            statement of the available funds referred to in Article 5(1) and after deduction
            of any amounts to be disbursed according to information specified in Article
            6(10) and on the basis of the recommendations already issued in accordance
            with paragraph 9 of this Article;
      (c)   the share of the funds allocated to priority investments is at least 70% of the
            total amount of funds used by the beneficiary Member State, including the
            following funds:
            –     funds already disbursed for priority and non-priority investments;
            –     funds still to be disbursed according to information specified in Article
                  6(10);
            –     funds still to be disbursed in accordance with the recommendations
                  already issued under paragraph 9;
            –     funds requested for the investment proposal under the assessment;
EN                                           8                                               EN
 ---pagebreak---        (d)   the financing complies with the fourth sentence of the second subparagraph of
             Article 10d(6) of Directive 2003/87/EC;
       (e)   the beneficiary Member State has provided evidence that the investment
             proposal fulfils any of the following requirements:
             –      it has obtained State aid clearance in accordance with the Commission
                    decision;
             –      it is exempted from the State aid notification in accordance with
                    Regulation (EU) No 651/2014;
             –      it does not constitute State aid within the meaning of Article 107(1) of
                    the Treaty;
       (f)   the beneficiary Member State has confirmed in writing that the investment
             complies with any other applicable requirements of Union and national law;
       (g)   according to the information provided by the beneficiary Member State about
             contributions from other Union and national instruments, the amounts
             requested from the Modernisation Fund are not intended to cover the same
             costs of the investment as those financed by another Union or national
             instrument.
   8.  Where a proposal concerns a subsequent disbursement for a scheme recommended
       for the financing by the Investment Committee in accordance with paragraph 9 prior
       to the first disbursement, the proposal shall not require carrying out of due diligence
       assessment by the EIB, and the assessment of the proposal by the Committee shall be
       limited to verification of compliance with the requirements specified in points (b), (c)
       and (d) of paragraph 7, provided that there have been no changes to the scheme.
   9.  The Investment Committee shall issue a recommendation on the investment proposal
       in the meeting referred to in Article 11(1), specifying the amount of the support from
       the Modernisation Fund, stating the reasons for its conclusion, and including any
       suggestions regarding appropriate financing instruments.
   10. If the Investment Committee does not recommend financing the investment, it shall
       state the reasons for its conclusion. In such case, the investment shall not be
       supported from the Modernisation Fund. The concerned Member State may revise
       the investment proposal taking into consideration the findings of the Investment
       Committee and it may submit a new investment proposal in any subsequent biannual
       disbursement cycle.
                                           Article 8
                         Disbursement decision of the Commission
   1.  After the meeting referred to in Article 11(1) of this Regulation, the Commission
       shall without undue delay adopt the decision referred to in Article 10d(3) of
       Directive 2003/87/EC specifying the amount of the resources from the
       Modernisation Fund to be disbursed to each investment confirmed as a priority
       investment by the EIB or recommended for the financing by the Investment
       Committee (‘disbursement decision’).
       A decision concerning a disbursement of the resources from the Modernisation Fund
       to a scheme shall specify the amount of the first or any subsequent disbursement, as
       appropriate.
EN                                             9                                                EN
 ---pagebreak---    2.       The Commission shall notify the disbursement decision to the beneficiary Member
            States concerned, and it shall inform thereof the EIB and the Investment Committee.
                                                Article 9
                                               Payments
   Within 30 days of the date of the disbursement decision, the EIB shall transmit to the
   beneficiary Member State the relevant amount of the Modernisation Fund support.
                                               Article 10
                                      Discontinued investments
   1.       Subject to the documentary evidence provided by the beneficiary Member State in
            the annual report referred to in Article 13, an investment shall be deemed
            discontinued in either of the following cases:
            (a)   the project proponent or the scheme managing authority has not financed the
                  investment for the period exceeding two consecutive years;
            (b)   the project proponent has not spent the total amount of the revenues from the
                  Modernisation Fund disbursed to the investment within five years from the
                  date of the relevant disbursement decision of the Commission.
            Point (b) shall not apply to schemes.
   2.       By the decision adopted in accordance with Article 8, the Commission shall modify
            the amount already disbursed for the discontinued investment by deducting any
            amount not yet paid by the beneficiary Member State to the project proponent or the
            scheme managing authority. Any such unpaid amount shall increase the resources in
            the Modernisation Fund available to the concerned Member State in accordance with
            Article 5(2)(b), and it shall be set off against any future payment by the EIB to the
            Member State concerned under Article 9.
   3.       Without prejudice to paragraph 1 of this Article, prior to the closing date of the
            statement of the available funds referred to in Article 5(3), the beneficiary Member
            State may inform the Commission about a discontinued investment and request a
            modification of the disbursement decision in accordance with paragraph 2 of this
            Article. This request may concern the amounts not yet paid to the project proponent
            or the scheme managing authority and the amounts already paid to the project
            proponent or the scheme managing authority, but subsequently recovered by the
            beneficiary Member State. The beneficiary Member State shall provide the relevant
            documentary evidence justifying the request. Paragraph 2 of this Article shall apply
            to modification of the disbursement decision, the increase of the resources in the
            Modernisation Fund available to the concerned Member State, and the setting off of
            the amount returned to the Fund against any future payment by the EIB to the
            Member State.
                                               Article 11
                              Operation of the Investment Committee
   1.       The Investment Committee shall meet twice a year, at the latest by 15 July and 15
            December. The secretariat of the Investment Committee shall communicate the date
            of the meeting to the Member States as soon as that date becomes available.
EN                                                 10                                             EN
 ---pagebreak---    2. Unless the Committee issues a recommendation in accordance with the first and
      second sentence of the second subparagraph of Article 10d(7) of Directive
      2003/87/EC, it shall be quorate if at least half of the representatives of the
      beneficiary Member States, all representatives of the non-beneficiary Member States
      and the representatives of the Commission and of the EIB are present.
   3. The non-beneficiary Member States shall elect three representatives in the
      Investment Committee in a vote comprising all candidates. Each non-beneficiary
      Member State may propose one candidate. The three candidates who received the
      largest numbers of votes shall be elected. If two or more candidates obtained the
      same number of votes and as a result, more than three candidates would be elected,
      the vote shall be resumed, comprising all candidates, except for the candidate(s) who
      received the highest number of votes, and if appropriate, the second highest number
      of votes.
   4. The members of the Investment Committee may not have financial or other interests
      in industries which qualify for the Modernisation Fund support, whether direct or
      indirect, which could affect their impartiality or may objectively be perceived as
      such. They shall act in the public interest and in an independent manner. They shall
      make a declaration of interests prior to taking up function in the Investment
      Committee, and they shall update their declarations whenever a relevant change
      occurs.
   5. The EIB shall provide administrative and logistic support to the Investment
      Committee (the secretariat), including support with the administration of a website
      dedicated to the Modernisation Fund.
   6. On a proposal from the competent Commission department, the Investment
      Committee shall establish its rules of procedure which shall, in particular, lay down
      procedures for the following:
      (a)   appointment of members and observers to the Investment Committee, and their
            alternates;
      (b)   organisation of the meetings of the Investment Committee;
      (c)   detailed rules regarding conflict of interest, including the model declaration of
            interests.
   7. Members of the Investment Committee shall not receive any remuneration or
      reimbursement of costs for their participation in the activities of the Committee.
                                        Article 12
              Asset management guidelines and agreement with the EIB
   1. The EIB shall develop asset management guidelines to manage the revenues from the
      Modernisation Fund, taking into account the objectives of Directive 2003/87/EC and
      the internal rules of the EIB.
   2. After consulting the Member States, the Commission shall enter into an agreement
      with the EIB laying down the specific terms and conditions under which the EIB
      shall perform its tasks in relation to implementation of the Modernisation Fund.
      Those terms and conditions shall cover the following tasks:
EN                                          11                                                EN
 ---pagebreak---         (a)    auctioning and monetisation of the allowances destined for the Modernisation
               Fund, in accordance with Commission Regulation (EU) No 1031/20106;
        (b)    management of the revenues from the Modernisation Fund;
        (c)    confirmation of the priority investment proposals under Article 6 and carrying
               out due-diligence of non-priority investment proposals under Article 7;
        (d)    providing the secretariat to the Investment Committee,                            including
               administration of a website dedicated to the Modernisation Fund;
        (e)    preparation of draft reports of the Investment Committee under Article 14.
   3.   The agreement referred to in paragraph 2 shall specify the mechanism for the
        recovery of the costs of the EIB for the performance of its tasks. The costs recovery
        mechanism related to confirmation of priority investments and carrying out of due
        diligence of non-priority investments shall take into account the number and
        complexity of proposals submitted by each beneficiary Member State. The costs of
        the EIB for the performance of its tasks shall be financed from the funds available to
        each beneficiary Member State as referred to in Article 5(2)(a). The EIB shall report
        to the Commission and to the Member States on the completion of the tasks under
        the agreement and the related costs.
                                            CHAPTER III
           MONITORING, REPORTING, EVALUATION AND AUDITING
                                               Article 13
                Monitoring and reporting by the beneficiary Member States
   1.   Beneficiary Member States shall monitor implementation of investments financed
        from the Modernisation Fund. By 30 April, beneficiary Member States shall submit
        to the Commission an annual report for the preceding year containing information
        specified in Annex II.
   2.   The annual report referred to in paragraph 1 shall be accompanied by the following
        information:
        (a)    documentary evidence of the financing of investments from the Modernisation
               Fund in the preceding year;
        (b)    the annual financial statement in respect of each investment, or in the case of a
               scheme, the financial statement providing for aggregated data on expenditures
               to the scheme in the preceding year.
                                               Article 14
                             Reporting by the Investment Committee
   1.   The annual report of the Investment Committee referred to in the first sentence of
        Article 10d(11) of Directive 2003/87/EC shall include the following information:
   6
      Commission Regulation (EU) No 1031/2010 of 12 November 2010 on the timing, administration and
      other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of
      the European Parliament and of the Council establishing a scheme for greenhouse gas emission
      allowances trading within the Community (OJ L 302 18.11.2010, p. 1).
EN                                                  12                                                      EN
 ---pagebreak---       (a)    the number of investment proposals received, including the specification of the
             investment area;
      (b)    the number of recommendations issued and summary conclusions of each
             recommendation;
      (c)    an overview of the main conclusions regarding the proposed investments
             following from the technical and financial due diligence carried out by the EIB;
      (d)    the practical experience on procedural aspects of issuing the recommendations.
   2. On the basis of a draft prepared by the EIB, the Investment Committee shall adopt
      the final report for the preceding year by 15 March, and it shall forthwith submit it to
      the Commission.
                                         Article 15
                            Review and evaluation of the Fund
   1. In the review referred to in the second sentence of Article 10d(11) of Directive
      2003/87/EC, the Commission shall cover the following areas:
      (a)    confirmation of priority investments by the EIB;
      (b)    assessment of non-priority investments by the Investment Committee;
      (c)    financing and monitoring of investments by the beneficiary Member States;
      (d)    any relevant procedural aspects regarding the implementation of the
             Modernisation Fund.
      Based on the results of the review, the Commission shall, where appropriate, make
      the relevant proposals.
   2. At the end of the implementation of the Modernisation Fund, the Commission shall
      carry out a final evaluation of the implementation of the Modernisation Fund. In
      particular, the Commission shall evaluate the progresses towards the achievement of
      the Fund objectives as laid down in paragraphs 1, 2 and 3 of Article 10d of Directive
      2003/87/EC.
   3. The Commission shall make the results of the review and evaluation publicly
      available.
                                         Article 16
               Audits and protection of the financial interests of the Fund
   1. The EIB shall prepare annual accounts of the Modernisation Fund for each financial
      year, which shall run from 1 January to 31 December, taking into account the
      financial statements provided pursuant to Article 13(2)(b). Those accounts shall be
      subject to an independent external audit.
   2. The EIB shall submit to the Commission the following statements:
      (a)    by 31 March, the unaudited financial statements of the Modernisation Fund
             covering the preceding financial year;
      (b)    by 30 April, the audited financial statements of the Modernisation Fund
             covering the preceding financial year.
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 ---pagebreak---    3. The accounts and financial statements referred to in paragraphs 1 and 2 shall be
      drawn up in compliance with the International Public Sector Accounting Standards
      (IPSAS).
   4. The beneficiary Member States shall have the power to audit, on the basis of
      documents and on-the-spot checks, over all project proponents and scheme managing
      authorities, contractors and subcontractors to whom they provided support from the
      Modernisation Fund.
   5. For the purpose of paragraphs 1 and 2, beneficiary Member States, project
      proponents and scheme managing authorities, contractors and subcontractors who
      have received the resources from the Modernisation Fund shall keep available, for a
      period of five years following the last payment in respect of any project or scheme,
      all supporting documents and information regarding the payment or expenditure
      made.
   6. Beneficiary Member States shall take appropriate measures to ensure that, where
      activities financed under this Regulation are implemented, the financial interests of
      the Modernisation Fund are protected by the application of preventive measures
      against fraud, corruption and any other illegal activities, by effective checks and, if
      irregularities are detected, by the recovery of the amounts unduly paid and, where
      appropriate, by effective, proportionate and dissuasive administrative and financial
      penalties. Recoveries shall be implemented in accordance with the legislation of the
      beneficiary Member States.
      For any amounts recovered, the beneficiary Member State shall request a
      modification of a disbursement decision in accordance with Article 10(3).
                                      CHAPTER IV
                                  FINAL PROVISIONS
                                        Article 17
                       Information, communication and publicity
   1. The beneficiary Member States shall make publicly available on the websites of the
      relevant departments of their administrations information on the investments
      supported under this Regulation, in order to inform the public of the role and
      objectives of the Modernisation Fund. Such information shall include an explicit
      reference to the Modernisation Fund support received.
   2. The beneficiary Member States shall ensure that the final recipients of the
      Modernisation Fund support provide coherent, relevant and targeted information on
      the Modernisation Fund support received to multiple audiences, including the media
      and the public.
   3. The Modernisation Fund name shall be used for all communication activities and
      appear on notice boards at strategic places visible to the public.
   4. The beneficiary Member States and the Commission shall perform information,
      communication and promotion actions relating to the Modernisation Fund support
      and results. Such actions shall facilitate exchanges of experience, knowledge and
      best practices as regards the design, preparation and implementation of investments
      under the Modernisation Fund.
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 ---pagebreak---                                                Article 18
                                            Transparency
   1.       Without prejudice to paragraph 2, the secretariat of the Investment Committee shall
            arrange for the publication on the Modernisation Fund website of the following
            information:
            (a)   the names of the members and observers to the Investment Committee, and
                  their affiliation;
            (b)   the curricula vitae and the declarations of interest of the members of the
                  Investment Committee;
            (c)   the confirmations of the EIB concerning priority investments;
            (d)   the recommendations of the Investment Committee concerning non-priority
                  investments;
            (e)   the disbursement decisions of the Commission;
            (f)   the annual reports submitted by the beneficiary Member States under Article
                  13;
            (g)   the annual reports submitted by the Investment Committee under Article 14;
            (h)   the Commission’s review and evaluation of the Modernisation Fund under
                  Article 15.
   2.       Member States, the Commission and the EIB shall not disclose any commercially
            confidential information included in any document, information or other material
            submitted by them or by any third party in connection with implementation of the
            Modernisation Fund.
                                               Article 19
                                           Entry into force
   This Regulation shall enter into force on the twentieth day following that of its publication in
   the Official Journal of the European Union.
   This Regulation shall be binding in its entirety and directly applicable in all Member States.
   Done at Brussels, 9.7.2020
                                                 For the Commission
                                                 The President
                                                 Ursula VON DER LEYEN
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 ---documentbreak---                             EUROPEAN
                            COMMISSION
                                                     Brussels, 9.7.2020
                                                     C(2020) 4541 final
                                                     ANNEXES 1 to 2
                                         ANNEXES
                                            to the
                           Commission Implementing Regulation
   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
EN                                                                                        EN
 ---pagebreak---                                              ANNEX I
                             Information about investment proposal
                 to be submitted to the EIB and to the Investment Committee
   1.    All investment proposals
   1.1.  specification of the investment area in accordance with Article 10d(1) or (2) of
         Directive 2003/87/EC, as appropriate;
   1.2.  general description of the investment, including the objectives and targeted
         beneficiary(ies), technology (if relevant), capacity (if relevant), and estimated
         duration of the investment;
   1.3.  justification for the Modernisation Fund support, including the confirmation of the
         compliance of an investment with Article 10d(1) of Directive 2003/87/EC;
   1.4.  specification of costs to be covered from the Modernisation Fund;
   1.5.  description of the support instrument(s) used;
   1.6.  requested amount of the financing from the Modernisation Fund;
   1.7.  contribution(s) from other Union and national instruments;
   1.8.  existence of State aid (within the meaning of Article 107(1) of the Treaty), and
         indication of the following, as applicable:
         (a)    reference to the Commission decision clearing national aid measure;
         (b)    reference under which the block-exempted measure has been registered (State
                aid number attributed by the Commission's electronic notification system
                referred to in Article 11 of Regulation (EU) No 651/2014);
         (c)    expected date for notification of the aid measure to the Commission;
   1.9.  Member State’s declaration of compliance with the applicable Union and national
         laws;
   1.10. when the investment aims at implementation of a territorial just transition plan,
         information about the expected contribution of the investment to that plan.
   2.    Additional information about schemes
   2.1.  name of the managing authority;
   2.2.  indication whether the proposal concerns an existing scheme;
   2.3.  total volume of the scheme.
   3.    Additional information about proposals other than schemes
   3.1.  name of the project proponent;
   3.2.  location of the project;
   3.3.  total investment costs;
   3.4.  development stage of the project (from feasibility to operation);
   3.5.  list of mandatory permits obtained or to be obtained.
   4.    Additional information about non-priority proposals
EN                                               1                                           EN
 ---pagebreak---    4.1. quantitative data on the construction and operation phases, including proposal’s
        contribution to the objectives of the Modernisation Fund, the Union’s 2030 climate
        and energy policy framework and the Paris Agreement;
   4.2. certified financial forecast, including intended financial contribution from private
        sources;
   4.3. description of any other targeted performance indicator, as requested by the EIB;
   4.4. other relevant information related to the project proponent, the investment, the
        general market conditions and environmental issues.
EN                                             2                                             EN
 ---pagebreak---                                            ANNEX II
               Information to be provided by the beneficiary Member State
                           in the annual report to the Commission
   1.   Overview of investments
   1.1. number of investments financed from the Modernisation Fund to date;
   1.2. number of on-going, completed and discontinued investments;
   1.3. overall ratio of the financing provided to priority investments against non-priority
        investments, if any, in the beneficiary Member State.
   2.   Information on each investment
   2.1. total investment triggered (total investment costs);
   2.2. dates and amounts of payments from the Modernisation Fund to the project
        proponent or the scheme managing authority;
   2.3. amounts received from the Modernisation Fund by the beneficiary Member State but
        not yet paid to the project proponent or the scheme managing authority;
   2.4. any amounts recovered by the beneficiary Member State from the project proponent
        or the scheme managing authority, and the dates of recovery;
   2.5. an assessment of the added value of the investment in terms of energy efficiency and
        modernisation of the energy system, including information on the following:
        (a)    the energy saved in MWh;
        (b)    expected cumulative MWh saved by the end of the investment lifetime;
        (c)    the greenhouse gas emissions saved in tCO2;
        (d)    expected cumulative tCO2 saved by the end of the investment lifetime;
        (e)    the additional renewable energy capacity installed, if applicable;
        (f)    achieved leverage of funds (total amount invested in relation to the
               contribution from the Modernisation Fund);
   2.6. when the investment aims at implementation of a territorial just transition plan,
        information about the expected contribution of the investment to that plan.
   2.7. for schemes, the reporting data specified shall be presented in aggregated form.
   3.   Additional information about investments other than schemes
   3.1. milestones achieved since the previous annual report;
   3.2. expected entry into operation;
   3.3. identified or expected delays in implementation;
   3.4. identified or expected changes in eligible costs, technology applied or results of an
        investment.
   4.   Additional information about non-priority investment
   4.1. confirmation of co-financing from private sources.
EN                                             3                                              EN