Climate change and carbon neutrality in 2050 both present a challenge to the Czech Republic and to Europe as a whole. The question is how to accelerate the decarbonisation of the Czech energy industry and speed up the transition to a climate neutral society? In its Directive 2003/87/EC for the period 2021-2030, the European Commission set up what is known as the “Modernisation Fund”, which offers European Union Member States billions in investment for the development of low-carbon technologies, modernisation of energy systems, and improvement of energy efficiency.
The Modernisation Fund: Support of sustainable technology and the Green Deal
The Modernisation Fund primarily draws funds from the monetisation of 2 % of the total number of emission allowances in the EU ETS system for the period 2021-2030. It focuses on the following priority areas:
- the generation and use of energy from renewable sources;
- energy efficiency;
- facilities for the accumulation and distribution of energy.
The European Commission also introduced the Modernisation Fund in a strategic package of measures entitled the Green Deal, which it launched at the end of 2019. The Modernisation Fund is presented here as one of several tools focusing on the climate and energy, one that will help in the EU’s transition to more sustainable management.
More information about the Modernisation Fund can be found at modernisationfund.eu.
The Modernisation Fund in the Czech Republic
How big is the Modernisation Fund allocation?
The total sum available to the Czech Republic at the current prices of emission allowances is a minimum of 150 billion koruna. This sum is 15.6 % of the total resources in the Modernisation Fund.
This money is the revenue of the State Environmental Fund of the Czech Republic. It is also through the Modernisation Fund that proceeds from allowances are used according to Article 10c(4) of Directive 2003/87/EC (what are known as derogation allowances) and 50 % proceeds from allowances according to Article 10(2)(b) of Directive 2003/87/EC (so-called solidarity allowances).
When will it be possible to draw funds from the Modernisation Fund in the Czech Republic?
Over the next 10 years. The first standard RFPs from the HEAT programme in the Modernisation Fund were announced in April 2021, and we will announce further RFPs from the RES+ and ENERG ETS programmes in the first half of 2021. RFPs from other programmes of the Modernisation Fund will be announced in coming years.
The mechanism of setting implementation of the Modernisation Fund, scheduling into areas which should contribute toward achievement of the Czech Republic’s climate targets, and other overarching information can be found at General Programme Document for Implementation of the Modernisation Fund in the Czech Republic (Czech version).
The State Environmental Fund will implement the Modernisation Fund
The State Environmental Fund of the Czech Republic has been determined as the beneficiary of resources from the Modernisation Fund in the Act on Trading in Emission Allowances and will take on the role of intermediary of this financial mechanism.
Financial measures from the Modernisation Fund will proceed through 9 separate programmes, in which the specific forms and conditions of support will be determined over time.
1. HEAT – Modernisation of heating systems
The programme supports the use of RES and low-carbon sources of energy primarily intended for heating, such as a change in the fuel base and modernisation of heat sources and distribution systems.
Share in the overall allocation: 26 %
2. RES+ New Renewable Energy Sources
The programme focuses on support for new non-fuel renewable energy sources.
Share in the overall allocation: 38.7 %
3. ENERG ETS – Improving energy efficiency and reducing greenhouse gas emissions in industry in EU ETS
The programme focuses on support for installations and measures designed to improve energy efficiency and/or reduce greenhouse gas production in industry for installations incorporated in EU ETS.
Share in the overall allocation: 13.3 %
4. ENERG – Improving energy efficiency in business
The programme focuses on support for installations and measures designed to improve energy efficiency and/or reduce greenhouse gas production in business (not EU ETS installations).
Share in the overall allocation: 6 %
5. TRANSCom – The modernisation of transport in the business sector
The programme supports the acquisition of alternatively powered vehicles and private infrastructure among business undertakings.
Share in the overall allocation: 3.5 %
6. TRANSGov – The modernisation of public transport
The programme supports the acquisition of alternatively powered vehicles and the construction of infrastructure for public transport intended for public organisations, enterprises with state involvement, and public entities and public non-commercial and commercial entities having a public service obligation.
Share in the overall allocation: 5 %
7. ENERGov – Energy efficiency in public buildings and infrastructure
The programme is intended to support comprehensive measures to improve energy efficiency and used renewable energy sources and low-emission energy sources in public buildings, government buildings, and public infrastructure.
Share in the overall allocation: 4 %
8. KOMUENERG – Community energy
The programme focuses on support for open energy societies established for the purpose of satisfying their own energy needs (the main purpose is not to generate profit).
Share in the overall allocation: 1.5 %
9. LIGHTPUB – Modernisation of public lighting systems
The programme focuses on support for the reconstruction and modernisation of public lighting systems, with the option of installing innovative elements.
Share in the overall allocation: 2 %