The Present and Future Design of the Modernization Fund and its Implementation across EU and in Romania

Abstract:

This paper completes the empirical literature on the EU ETS from the point of view of the policy design and implementation of low carbon technologies and the modernization of the energy infrastructure. In this respect, it is analysed the use of the Modernization Fund under the phase IV of ETS in year 2021, across EU and in Romania. At the same time, the paper depicts its future architecture from the legislative proposals under the Fit for 55 package.

The current research goes further the overview that I previously presented in 2019 on the arhitecture of EU Emission Trading System and its specific funding mechanisms up to 2030 considering that Teixido, Verde, Nicolli, 2019 supports the idea that the EU ETS reform for Phase IV enhanced financial support for low carbon investments through dedicated funds, namely the Modernization Fund and the Innovation Fund.

This paper is organized as follows: the abstract gives an overview of the paper and its main conclusions. Section 1 provides the introduction and the background on the Modernisation Fund as one of the funding mechanisms under the European Union Emission Trading Scheme and its main elements as part of the climate change policy design. At the same same time, it presents the latest proposed revision of the Modernisation Fund under ETS phase IV. Section 2 summarizes the literature review. It also includes a short presentation of the data used for the analysis (including their sources) and my contribution to the literature. Section 3 depict the results of the first year of the implementation of Modernisation Fund, at EU and national level. This section also accomodate briefly comments on the implemention based on the efficiency in the use of the funds by the Member States having in mind the administrative capacity and expertise and the level of the funds absorpted at national level. Section 4 concludes.