How to optimise EU ETS transition funds?

The briefing argues that eligible EU Member States, primarily in Central Eastern Europe, should maximise the Modernisation Fund by transferring allowances from the Article 10c derogation and the Solidarity & Growth Provision. It concludes that the Modernisation Fund is more flexible and effective for energy transition than Article 10c, which has strict financing requirements and limited eligibility. The document also discusses the potential financial impact of Market Stability Reserve (MSR) recalculations on Member State auction revenues.

• The Modernisation Fund is considered a superior investment vehicle compared to the Article 10c derogation due to its greater flexibility and fewer restrictions on eligible projects and applicants.
• Article 10c derogation in Phase 4 is subject to strict conditions, including a requirement that at least 30% of project investment be privately financed and a prohibition on participation by innovative start-ups and green companies.
• Neither the Modernisation Fund nor Article 10c can be used for coal investments, although a specific exemption exists for Romania and Bulgaria to invest in coal-powered district heating that is efficient and sustainable.
• Article 10c cannot be used for just transition initiatives, whereas the Modernisation Fund explicitly supports the redeployment, re-skilling, and up-skilling of workers in carbon-dependent regions.
• Under Article 10c, any new capacity built must be accompanied by the decommissioning of capacity with a higher carbon intensity.
• If eligible Member States transfer all Article 10c and Solidarity Provision allowances to the Modernisation Fund, the fund's value could increase from €11 billion to €50 billion, assuming an EU ETS price of €30/tonne of CO2.
• There is uncertainty regarding whether the Market Stability Reserve (MSR) withdrawal amounts will be recalculated following allowance transfers; if they are, Poland, Czechia, and Romania would benefit most, while Germany and the UK would lose the most.

APA

Jones, D., Carp, S., & Moore, C. (2019). How to optimise EU ETS transition funds? Ember. https://ember-energy.org/app/uploads/2020/03/Optimising-EUETS-transition-funds-2019.pdf

Chicago

Jones, Dave, Suzana Carp, and Charles Moore. How to optimise EU ETS transition funds? Ember, 2019. https://ember-energy.org/app/uploads/2020/03/Optimising-EUETS-transition-funds-2019.pdf.

Wikipedia

{{cite report |last1=Jones |first1=Dave |last2=Carp |first2=Suzana |last3=Moore |first3=Charles |title=How to optimise EU ETS transition funds? |publisher=Ember |date=19 June 2019 |url=https://ember-energy.org/app/uploads/2020/03/Optimising-EUETS-transition-funds-2019.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jones2019how, author = {Jones, Dave and Carp, Suzana and Moore, Charles}, title = {{How to optimise EU ETS transition funds?}}, institution = {Ember}, year = {2019}, month = jun, url = {https://ember-energy.org/app/uploads/2020/03/Optimising-EUETS-transition-funds-2019.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }