The Modernisation Fund is a European Union financing instrument established under the EU Emissions Trading System (ETS) to help modernize energy systems and improve energy efficiency in eligible lower‑income Member States. Operational since 2021, it channels a share of ETS allowance auction revenues into grants that reduce greenhouse‑gas emissions and enhance energy security.
Funding priorities include renewable electricity generation, grid upgrades, energy storage, district heating, industrial decarbonization and energy efficiency, and clean mobility infrastructure. Projects are proposed and implemented by beneficiary Member States; the European Commission oversees the instrument and the European Investment Bank provides technical support and due diligence. For the chemicals and refining sectors, the fund can support measures such as on‑site renewables, electrification, hydrogen production and use, heat integration, and CCS/CCU readiness, helping lower Scope 1 and 2 emissions in line with EU climate targets.
