Twelve States Push Bigger Carbon Fund

Poland is lining up allies early for the next fight over Europe’s green transition money. Twelve governments want the Modernisation Fund kept and enlarged after 2030, with Poland, Czechia, Romania, Greece and other mostly lower-income or coal-exposed states backing the move (Bankier, Reuters via Investing.com). For Malta, which is not fighting a coal exit but still lives with EU energy decisions as domestic policy, the issue is familiar: who receives the money Europe raises when it charges companies for pollution.

How pollution becomes public money

The ETS, the EU’s emissions trading system, makes companies hold allowances for their emissions under Directive 2003/87/EC. Put simply, Brussels makes pollution carry a price, then auctions part of that price back into public budgets.

The Modernisation Fund sends some of that money into electricity grids, efficiency projects, cleaner power and industrial upgrades in countries with heavier investment needs, according to the Commission’s fund description. This is the deal Poland wants extended: if carbon costs return as new energy systems, the ETS is easier to defend; if they do not, governments with older infrastructure can argue that Brussels is taking money before giving them the tools to change.

The amounts are no longer marginal. In 2024, ETS auctions raised nearly €3 billion for the Innovation Fund and more than €6 billion for the Modernisation Fund, according to the Commission’s auctioning data. Bankier reported that Warsaw expects around €14 billion, or about 60 billion złoty, from the fund in 2021-2030. That explains why Poland is organising before the next rulebook is drafted (Bankier).

Who gets protected

The coalition is not asking for the same thing in every capital. Poland wants a large and predictable stream for power-sector change. Czechia’s concern is more immediate: carbon costs can hit heating, industry and public budgets before investment brings bills down.

That difference matters for households. The EIB describes the Modernisation Fund as an investment tool for member states, not as direct compensation to citizens (EIB). For households, the sharper pressure comes from ETS2, the separate carbon market for buildings and road transport. Czech coverage cited an estimate that ETS2 could raise average Czech household monthly costs by about 477 Kč, while the main household cushion sits in the Social Climate Fund, not the Modernisation Fund (Aktuálně.cz).

Romania shows the infrastructure side of the case. Digi24 linked the coming energy programme to more than 5,000 MW of new wind and solar capacity and 3,000 MWh of storage through recovery-plan and Modernisation Fund channels (Digi24). The report does not settle how much is already funded, contracted or only planned. It does show why grids and storage are now at the centre of the post-2030 argument.

The same allowance cannot pay everyone

The pressure on ETS money is already visible. The Commission said an €8 billion target for RRF-linked REPowerEU allowance auctions had been reached after 111,455,000 allowances were sold, so those auctions will be suspended through August 2026 (Commission notice). One pot of carbon money has already been used for recovery, energy security and climate investment.

That is why richer member states hear the Modernisation Fund debate as part of a wider budget squeeze. Friedrich Merz said current EU budget ideas were unaffordable and unbalanced, warning they could raise Germany’s annual contribution by €15-20 billion (federal government transcript). A larger Modernisation Fund would not automatically become a German cheque. It still lands inside the same argument Malta knows from every EU budget round: who pays when defence, Ukraine, competitiveness and climate all claim priority at once.

The strongest case for Poland’s coalition is practical. Europe cannot keep charging for carbon while leaving poorer energy systems without enough money to change. The strongest objection is equally practical: every allowance reserved for one purpose cannot also cushion households, fund industry, support innovation or ease pressure on the EU budget.

The missing details remain substantial. The coalition letter has not surfaced publicly in the cited reporting, so claims about nuclear eligibility need caution. There is no verified post-2030 envelope, no allocation formula and no country-by-country investment gap. Brussels now has to keep carbon pricing politically credible without turning every allowance into a fight among industry, households, poorer states and the EU budget.