National Fund for Environmental Protection and Water Management

The Modernisation Fund is a dedicated funding programme to support ten EU Member States in their transition to climate neutrality, by helping to modernise their energy systems and improve energy efficiency. 

The Beneficiary Member States (BMS) are Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia. The Modernisation Fund runs from 2021 to 2030, and the respective BMS are responsible for implementing the Modernisation Fund on their territory, as well as selecting and submitting investment proposals they would like to support from their Modernisation Fund share.

The Modernisation Fund was created to support investments in:

• Generation and use of energy from renewable sources;
• Energy efficiency;
• Energy storage;
• Modernisation of energy networks, including district heating, pipelines and grids;
• Just transition in carbon-dependent regions: redeployment, re-skilling and upskilling of workers, education, job-seeking initiatives and start-ups.

The Modernisation Fund is funded from revenues from the auctioning of carbon allowances under the EU Emission Trading Scheme. 

The Modernisation Fund is funded from

• revenues from the auctioning of 2% of the total allowances for 2021-30 under the EU Emissions Trading System (EU ETS);
• additional allowances transferred to the Modernisation Fund by beneficiary Member States – five opted to do so (Croatia, Czech Republic, Lithuania, Romania and Slovakia).

Modernization Fund in Poland – Institutional Setup.

In order to finance the programme from the Modernization Fund (MF), the Polish state is obliged
to present the proposed support area to the European Investment Bank (EIB) and the Investment Committee to obtain confirmation whether the project meets the conditions set out in the EU ETS Directive.

At least 70% of the funds from the Fund shall be allocated to projects included on the list of priority areas, and a maximum of 30% to projects not included in this list (70/30 rule).

If a programme is confirmed as belonging to one of the priority areas, it uses a simpler subsidy path where, once the EIB confirms that the programme belongs to the priority area, the European Commission decides to disburse funds to finance projects under that programme. If the programme is classified as a non-priority area, it is necessary to take into account the recommendations of the Investment Committee when determining the rules of financing.

Financing from MF funds in Poland takes place within selected priority programmes implemented
by the National Fund for Environmental Protection and Water Management (NFEP&WM).

Modernisation Fund in Poland – implementation scheme

 

All the schemes supported by Modernisation Fund are in line with Article 10d, paragraph 1 Directive 2003/87/EC as they will promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner, which is the main aim of the Directive. They will lead to modernization of energy systems and improvement of energy efficiency. 

The schemes contribute to the implementation of commitments under the United Nations Framework Convention on Climate Change as well as the Kyoto Protocol and the Paris Agreement, and with the updated contribution of the EU and its Member States to the UNFCCC, which are international legal instruments obliging countries to reduce greenhouse gas emissions.

The schemes are consistent with the Poland’s Energy Policy until 2040, reduction goals stemming from the Paris Agreement and EU legislation, and assumptions of the National Strategy for Responsible Development (All detailed information available on website.