A new study published by E3G, an independent climate change think tank, focuses on barriers that prevent Central and Eastern European (CEE) countries from accelerating decarbonization efforts in the industrial sector.

One of the challenges that CEE states are facing is the high dependence on EU funding for climate spending. Furthermore, despite significant financial resources, mainly those provided by the ETS-related revenues, spending was “insufficiently targeted towards the investments necessary for industrial transformation,” say the authors.

A separate report published last year by the WWF revealed that “of the money EU countries did raise from the ETS, at least a third was either not spent on climate action at all or was spent on projects of questionable value to the climate”.

According to E3G calculations, assuming an average carbon price of €90, “revenues from the Modernisation Fund and ETS alone can provide more than €160bn to the region by 2030”.

Source: E3G, chart by EMBA Power

Following the revision of the EU ETS, member states must use all these revenues on climate and energy-related projects. However, “the criteria of what constitutes such spending remain loosely defined,” the report warns.