According to a report published on Wednesday by CEE Bankwatch, the Modernisation Fund maintained a high level of investment in 2025, disbursing approximately €5.4 billion. Although substantial, this was below the record €5.8 billion invested in 2024.

Over its first five years of operation, the Fund disbursed a total of €20.7 billion to 13 EU Member States, representing around 36% of the more than €57 billion expected to be available through the Modernisation Fund by 2030.

However, CEE Bankwatch found that “for every €3 spent on favourable projects, at least €1 was allocated to harmful investments.” The report classifies investments in fossil fuels, unsustainable renewable energy, and waste incineration with energy recovery as harmful.

Together, these categories received approximately €4.2 billion, accounting for 21% of the Fund’s total disbursements over the period. However, CEE Bankwatch estimates that this share could rise to 35%, citing “the current lack of transparency around the final technology choices” for a number of projects.

Romania was the largest beneficiary, receiving €6.77 billion, or 32.8% of the total disbursements. It was followed by the Czech Republic with 31.5% and Poland with 21.2%. “Collectively, they received €17.68 billion, or 85% of the total funding disbursed by the end of 2025,” the report notes.

The Modernisation Fund is financed through the EU Emissions Trading System (EU ETS) and was established to help lower-income Member States modernise their energy systems and reduce greenhouse gas emissions. It primarily supports countries in Central and Eastern Europe. The Fund currently provides financing to Lithuania, Hungary, Czechia, Bulgaria, Slovenia, Poland, Croatia, Romania, Estonia, Slovakia, Latvia, Greece, and Portugal.