Glass half full? Mid-term analysis of the Modernisation Fund’s operations

Report    |    29 July 2026

Since becoming operational in 2021, the EU’s Modernisation Fund has disbursed more than EUR 20 billion, making it one of the EU’s largest financing instruments for energy investments in central and eastern Europe. This report assesses the performance of the Fund at the halfway point of its operations and examines whether the Fund, initially designed to operate until 2030, is delivering on its objective of helping lower-income EU Member States transition away from fossil fuels.   

This publication updates Bankwatch’s 2025 assessment of the Fund and comes at a critical moment for EU climate and energy policy. Its findings aim to inform decision makers at both EU and national levels in the context of the Commission’s 2026 review of the EU Emissions Trading System (ETS) Directive, which provides the legal framework for the Fund. In its July 2026 ETS proposal, the Commission proposed extending the Fund until 2040 and ending support for fossil fuel investments from 2031 onwards.