Twelve EU member states have formally requested that the European Commission boost the size of the modernisation fund that aids less affluent member countries in their transition from fossil fuels, according to a June 19 letter sent to the Commission.
The countries named in the appeal are Poland, Bulgaria, Romania, Estonia, Greece, the Czech Republic, Croatia, Hungary, Latvia, Lithuania, Slovakia and Slovenia. The group is asking for an expansion of the fund, which is financed through revenues generated by sales of carbon market permits.
Since 2021 the modernisation fund has distributed in excess of 20 billion euros. The letter, cited in reporting on the request, framed the call for more resources in the context of broader political and economic uncertainty across the region.
"In the current political and economic context, characterised by increased geopolitical risks and uncertainty, predictable financing mechanisms remain an essential condition for the success of the energy transition in the EU," the letter said. "We call for a significant increase in the scale of financing, aligned with the growing challenges of the transition."
The appeal reaches the Commission at a sensitive moment: the European Commission is preparing a revision of the EU emissions trading system (ETS), with a formal proposal scheduled for release on July 15. The Commission is being pressed by varied interests - including governments and industries - that have competing views on how the carbon trading scheme should be adjusted.
The planned review of the ETS seeks to update the carbon market for the period after 2030 and to align its mechanisms with the EU's climate target for 2040 - a goal described in the letter as a 90% reduction in emissions by that year.
The June 19 communication and the looming ETS proposal underscore a policy debate that links the availability of dedicated financing streams to the broader ambition and design of the EU carbon market. Member states pushing for an enlarged modernisation fund emphasize the need for stable, predictable support to carry out energy transition plans, while the Commission faces trade-offs as it weighs different stakeholders' priorities.
Summary
- Twelve EU member states asked the European Commission on June 19 to enlarge the modernisation fund, funded by carbon permit revenues.
- The fund has allocated more than 20 billion euros since 2021.
- The request precedes a planned ETS revision proposal due on July 15 and aims to align financing with the EU's 2040 climate objective of a 90% emissions cut.