Twelve EU countries including Poland, Bulgaria, Romania, and Estonia have formally asked the European Commission to increase funding for the Modernisation Fund. This fund uses revenue from carbon permit sales under the EU Emissions Trading System (ETS) to help poorer member states shift away from fossil fuels. Since 2021 it has invested over 20 billion euros in projects like home insulation and clean heating programs. The request comes as the EU prepares a major revision of its ETS, due July 15. Some governments want to weaken the carbon market to cut costs for local industries, which could reduce the money available for the fund. The letter argues that predictable financing is essential for the energy transition given geopolitical risks and rising costs. The outcome matters for carbon markets because any changes to the ETS will affect carbon prices, permit allocation, and the flow of climate finance to the regions that need it most. The Modernisation Fund has backed specific projects like Hungary's thermal bath renovations and Poland's Clean Air program, showing real-world impact beyond policy debate.
