Efficient use of Modernization Fund


On October 24, 2014, the European Council established the Modernization Fund (MF) for years 2021–2030 supplied with revenue from the sale of 2% of the total pool of CO2 emission allowances. The instrument is to support the modernization of power system and the improvement of energy efficiency in EU Member States, where GDP per capita in 2013 was lower than 60% of EU average (in nominal terms). 

The analysis focuses on the issue of how to make optimum use of the MF in Poland, taking into consideration the challenges and priorities of the Polish energy policy by 2030.

Key conclusions

  • The Modernization Fund will receive a relatively small capital injection in the amount of EUR 2–5 billion.
  • The freedom of its development is limited by the conclusions of the European council of October 24, 2014.
  • The Fund shall be allocated to urgent and important tasks that have no access to other sources of financing.
  • We recommend that the Modernization Fund be used in the following areas:
  1. retrofitting of existing single-family buildings,

  2. heating sector modernisation – both heat generation and networks,

  3. development of low-emission distributed generation.

  •  The sources from the Fund should:
  1. stimulate private resources,

  2. close the financing gap,

  3. support integrated projects.

  • The Fund should be used in coordination with other domestic economic policy tools.


Title of analysis: "Efficient use of Modernization Fund"
Date of publication: May 2015 
Authors: dr Maciej Bukowski, Jędrzej Maśnicki, Aleksander Śniegocki (WISE), dr Jan Rączka (Regulatory Assistance Project) 

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