Modernisation Fund

The Modernisation Fund is a dedicated EU funding programme to support 10 lower-income EU Member States (Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia) in their transition to climate neutrality by helping to modernise their energy systems and improve energy efficiency. It will contribute to meeting the 2030 climate and energy targets in these member states.

How does the modernisation fund work?

The Modernization Fund is coordinated by the European Investment Bank (EIB) in cooperation with the European Commission. It supports developments in renewable energy, energy efficiency, energy storage and energy networks. In addition just transition is supported carbon-dependant regions.

The fund finances national programs and projects which are funded by the European Union's Greenhouse Gas Emissions Trading Scheme (ETS). 2% of the revenues from emissions trading during the 2021-2030 period will be shared between the beneficiary member states. Estonia's share of the total fund income is 2.78%.

To obtain financing, the beneficiary Member State has to:

  • demonstrate that the investment complies with the Modernisation Fund requirements set in the ETS directive and the Implementing regulation;
  • have sufficient funds available on its Modernisation Fund account;
  • provide evidence that the investment proposal is in line with the State aid rules;
  • confirm that the investment complies with any other applicable requirements of Union and national law;
  • confirm that there is no double funding of the same costs with another Union or national instrument.

The Modernisation Fund comprises of priority and non-priority investments. Priority investments that have to fall into at least one priority area as defined by the ETS Directive. Non-priority investments that do not fall into a priority area but meet the Modernisation Fund objectives and demonstrate reduction of greenhouse emissions. Support for non-priority investments must also be approved by the Investment Committee of the Modernisation Fund.

The Modernisation Fund Investment committee comprises of:

  • 10 representatives, one per beneficiary Member State;
  • 3 representatives from non-beneficiary Member States (Germany, the Netherlands and Sweden), elected by all non-beneficiary Member States;
  • 1 representative from the EIB;
  • 1 representative from the European Commission.

Estonian programs supported from the Modernisation Fund

In 2021, Estonia submitted two applications for priority investments to the Modernisation Fund that were approved by the European Commission.

Energy-efficient low-emission public transport programme

Rong peatunud jaamas

The programme will primarily focus on increasing the energy efficiency of public transport in Estonia. To do this, investments that accelerate the transition to renewable energy and hydrogen based transport are supported. The activities in this program support the Transport and Mobility Master Plan 2021-2035 for Estonia as well as the National Energy and Climate Plan 2030.

The program aims to make the transport sector more energy efficient as well as to reduce CO2 emissions. For this purpose, an environmentally friendly and energy-efficient vessel will be acquired between Virtsu and Kuivastu. The Estonian train fleet will also become more energy efficient, with plans to acquire 10 electric passenger trains with the help of the fund. In addition, the use of electric buses and/or trams is encouraged in cities.

The planned support from the Modernisation Fund during the 2021-2030 period, will be in the amount of 144.6 million euros.

Programme for improvement of energy efficiency and renewable energy use in public sector buildings

Ministeeriumite ühishoone

The goal of the program is to increase energy efficiency of public sector buildings and through that reduce their greenhouse gas emissions. The total floor area of public sector buildings to be renovated using MF support in the period 2021-2030 to achieve the energy efficiency target will be approximately 255 000 - 425 000 m2. The program is implemented through two sub-programs, the first focusing on central government buildings and the second on local government buildings.

The planned support from the Modernisation Fund during the 2021-2030 period, will be in the amount of 170 million euros.


Estonia is represented in the Modernisation Fund Investment Committee by Ivo Krustok and Imra Banyasz. They can give detailed information about the Modernisation Fund activities and the programs financed from the fund.
Additional information about the fund along with the contact information of representatives from other Member States can be found on the official website of the Modernisation Fund.

Ivo Krustok

+372 626 2806

Imre Banyasz

+372 626 0719

Last updated: 06.01.2022