Commission Implementing Regulation (EU) 2020/1001 of 9 July 2020 laying down detailed rules for the application of Directive 2003/87/EC of the European Parliament and of the Council as regards the operation of the Modernisation Fund supporting investments to modernise the energy systems and to improve energy efficiency of certain Member States

CHAPTER I

GENERAL PROVISIONS

Article 1

Subject matter

This Regulation lays down detailed rules on the operation of the Modernisation Fund as regards the following:

(a) submission of proposals for financing of investments;

(b) assessment of priority investments and non-priority investments;

(c) management, disbursement and payment of the resources from the Modernisation Fund;

(d) composition and operation of the Investment Committee for the Modernisation Fund (‘Investment Committee’);

(e) monitoring, reporting, evaluation, and auditing;

(f) information and transparency.

Article 2

Definitions

For the purposes of this Regulation the following definitions apply:

(1) ‘beneficiary Member State’ means a Member State listed in Annex IIb to Directive 2003/87/EC;

(2) ‘non-priority investment’ means an investment that does not fall into any area listed in Article 10d(2) of Directive 2003/87/EC;

(3) ‘non-priority small-scale project’ means a non-priority investment receiving State aid the total amount of which meets the criteria of the de minimis aid in accordance with Article 3 of Commission Regulation (EU) No 1407/2013 (¹);

(4) ‘priority investment’ means an investment that falls into at least one area listed in Article 10d(2) of Directive 2003/87/EC;

(5) ‘scheme’ means an investment proposal which complies with the following criteria: (a) it comprises a consistent set of priorities coherent with the objectives of the Modernisation Fund, and because of the characteristics of the projects under the scheme, it can be qualified either as a priority or non-priority investment; (b) it has a duration of more than one year; (c) it has a national or regional scope; and (d) it aims to support more than one public or private person or entity responsible for initiating or initiating and implementing projects under the scheme;

(6) ‘large-scale scheme’ means a scheme for which the total Modernisation Fund support requested exceeds EUR 100 000 000 ;

(7) ‘large-scale project’ means an investment other than a scheme, for which the total Modernisation Fund support requested exceeds EUR 70 000 000 ;

(8) ‘category of funds’ means any of the following categories of funds available to a beneficiary Member State: (a) funds generated by the auctioning of allowances under Article 10(1), third subparagraph, of Directive 2003/87/EC; (b) funds generated by the auctioning of allowances under Article 10(1), fourth subparagraph, of Directive 2003/87/EC; (c) funds generated by the auctioning of the allowances transferred to the Modernisation Fund under Article 10d(4) of Directive 2003/87/EC;

(9) ‘subcategory of funds’ means any of the following subcategories of funds generated by the auctioning of allowances transferred to the Modernisation Fund in accordance with Article 10(1), third subparagraph, of Directive 2003/87/EC: (a) funds generated before 31 December 2027; (b) funds generated between 31 December 2027 and 30 December 2028; (c) funds generated after 30 December 2028.

CHAPTER II

FINANCING OF INVESTMENTS

Article 4

Submission of investment proposals

When submitting investment proposals, beneficiary Member States shall provide information specified in Annex I.

The beneficiary Member State shall indicate whether the proposal concerns a priority investment or a non-priority investment.

After the Commission has decided on the first disbursement to the scheme in accordance with Article 8(1), any subsequent disbursement shall require a separate proposal from the beneficiary Member State specifying the amount to be disbursed and containing the updated information about the scheme, as appropriate.

When submitting that proposal, the beneficiary Member State shall specify the amount requested as the first disbursement for the large-scale project and submit a project implementation schedule and a corresponding disbursement schedule.

After the Commission has decided on the first disbursement to the large-scale project under Article 8(1), any subsequent disbursement shall require a separate proposal from the beneficiary Member State specifying the amount to be disbursed and containing updated information on the large-scale project, as appropriate. In addition, the beneficiary Member State shall provide information about the implementation of the project compared to the submitted implementation schedule.

Article 5

Available funds

The statement of the available funds shall specify the categories and subcategories of funds available to the beneficiary Member State, as appropriate.

For each category and subcategory of funds, the statement of the available funds shall specify the following:

(a) the amount held with the EIB, excluding any amounts already disbursed but not yet paid to the Member State in accordance with Article 9, and excluding any costs of the EIB specified in the agreement referred to in Article 12(3);

(b) any amounts disbursed to discontinued investments which increase the resources in the Modernisation Fund available to the beneficiary Member State in accordance with Commission decision referred to in Article 10(2).

Article 6

Confirmation of priority investments

If submitted later than six weeks before the first biannual meeting of the Investment Committee referred to in Article 11(1), but at least six weeks before the second biannual meeting of the Committee, they shall be assessed in the second biannual disbursement cycle of the calendar year.

If submitted later than six weeks before the second biannual meeting of the Investment Committee referred to in Article 11(1), they shall be assessed in the first biannual disbursement cycle of the following calendar year.

The EIB may confirm the proposal as a priority investment provided that the following conditions are met:

(a) the beneficiary Member State has demonstrated that the investment complies with the requirements laid down in Article 10d(1) of Directive 2003/87/EC and that it falls into at least one area listed in Article 10d(2) of that directive;

(b) the beneficiary Member State has sufficient funds available in the relevant category or subcategory of funds according to the statement of the available funds referred to in Article 5(1) and after deduction of any amounts to be disbursed for investments already confirmed in accordance with paragraph 9 of this Article;

(c) the beneficiary Member State has provided evidence that the investment proposal fulfils either of the following requirements: — obtained State aid clearance in accordance with the Commission decision, — is exempted from the State aid notification in accordance with the applicable State aid rules, — does not constitute State aid within the meaning of Article 107(1) of the Treaty;

(ca) the beneficiary Member State has demonstrated that the investment complies with Article 10f of Directive 2003/87/EC, where needed;

(d) the beneficiary Member State has confirmed in writing that the investment complies with any other applicable requirements of Union and national law;

(e) according to the information provided by the beneficiary Member State about contributions from other Union and national instruments, the amounts requested from the Modernisation Fund are not intended to cover the same costs of the investment as those financed by another Union or national instrument;

(f) where a proposal concerns a scheme, the duration of the scheme does not exceed five years. This condition shall not prevent the beneficiary Member State from submitting a new investment proposal for the continuation of the scheme in accordance with Article 4.

Where a proposal concerns a subsequent disbursement for a scheme or a large-scale project confirmed by the EIB in accordance with paragraph 9 prior to the first disbursement and there have been no changes to the scheme or the large-scale project, the EIB may confirm the proposal as a priority investment, provided that the following conditions are met:

(a) the investment fulfils the requirements specified in paragraph 7, points (b) and (c);

(b) the investment fulfils the requirement specified in paragraph 7, point (ca), except for the schemes confirmed by the EIB in accordance with paragraph 9 before 5 June 2023;

(c) the beneficiary Member State provides information about the implementation of the scheme or large-scale project in accordance with Annex I, point 4.2.

The EIB shall forthwith inform the beneficiary Member State concerned and the Commission about the decision referred to in the first subparagraph.

Article 7

Recommendations on non-priority investments

If submitted later than 10 weeks before the first biannual meeting of the Investment Committee referred to in Article 11(1), but at least 10 weeks before the second biannual meeting of the Committee, they shall be assessed in the second biannual disbursement cycle of the calendar year.

If submitted later than 10 weeks before the second biannual meeting of the Investment Committee referred to in Article 11(1), they shall be assessed in the first biannual disbursement cycle of the following calendar year.

The Investment Committee may issue a recommendation on financing the investment proposal provided that the following conditions are met:

(a) the beneficiary Member State has demonstrated that the investment complies with the requirements laid down in Article 10d(1) of Directive 2003/87/EC;

(b) the beneficiary Member State has sufficient funds available in the relevant category or subcategory of funds according to the statement of the available funds referred to in Article 5(1) and after deduction of any amounts to be disbursed according to information specified in Article 6(10) and on the basis of the recommendations already issued in accordance with paragraph 9 of this Article;

(c) where the proposed investment is to be financed from revenues generated from the auctioning of the allowances referred to in Article 10(1), third subparagraph, of Directive 2003/87/EC, or of the allowances transferred to the Modernisation Fund under Article 10d(4) of that Directive, the share of the funds allocated to priority investments is at least 80 % of the revenue from allowances referred to in Article 10(1), third subparagraph, and from allowances transferred to the Modernisation Fund under Article 10d(4) of Directive 2003/87/EC used by the beneficiary Member State, including the following funds: — funds already disbursed for priority and non-priority investments, — funds still to be disbursed according to information specified in Article 6(10), — funds still to be disbursed in accordance with the recommendations already issued under paragraph 9, — funds requested for the investment proposal under the assessment;

(ca) where the proposed investment is to be financed by the revenues generated from the auctioning of the allowances referred to in Article 10(1), fourth subparagraph, of Directive 2003/87/EC, the share of the funds allocated to priority investments is at least 90 % of the revenue from allowances referred to in Article 10(1), fourth subparagraph, used by the beneficiary Member State, including the following funds: — funds already disbursed for priority and non-priority investments, — funds still to be disbursed according to the information specified in Article 6(10), — funds still to be disbursed in accordance with a recommendation already issued under paragraph 9, — funds requested for the investment proposal under assessment;

(d) the financing complies with the fourth sentence of the second subparagraph of Article 10d(6) of Directive 2003/87/EC;

(e) the beneficiary Member State has provided evidence that the investment proposal fulfils any of the following requirements: — it has obtained State aid clearance in accordance with the Commission decision, — it is exempted from the State aid notification in accordance with applicable State aid rules, — it does not constitute State aid within the meaning of Article 107(1) of the Treaty;

(ea) the beneficiary Member State has demonstrated that the investment complies with Article 10f of Directive 2003/87/EC, where needed;

(f) the beneficiary Member State has confirmed in writing that the investment complies with any other applicable requirements of Union and national law;

(g) according to the information provided by the beneficiary Member State about contributions from other Union and national instruments, the amounts requested from the Modernisation Fund are not intended to cover the same costs of the investment as those financed by another Union or national instrument;

(h) where a proposal concerns a scheme, the duration of the scheme does not exceed five years. This condition shall not prevent the beneficiary Member State from submitting a new investment proposal for the continuation of the scheme.

Where a proposal concerns a subsequent disbursement for a scheme or a large-scale project recommended for the financing by the Investment Committee in accordance with paragraph 9 prior to the first disbursement and there have been no changes to the scheme or the large-scale project, the Investment Committee may recommend the proposal for financing, provided that the following conditions are met:

(a) the investment fulfils the requirements specified in paragraph 7, points (b) to (e);

(b) the investment fulfils the requirement specified in paragraph 7, point (ea), except for the schemes recommended for financing by the Investment Committee in accordance with paragraph 9 before 5 June 2023;

(c) the beneficiary Member State provides information about the implementation of the scheme or large-scale project in accordance with Annex I, point 4.2.

Article 8

Disbursement decision of the Commission

A decision concerning a disbursement of the resources from the Modernisation Fund to a scheme shall specify the amount of the first or any subsequent disbursement, as appropriate.

Article 9

Payments

Within 30 days of the date of the disbursement decision, the EIB shall transmit to the beneficiary Member State the relevant amount of the Modernisation Fund support.

Article 10

Discontinued investments

Subject to the annual report submitted by the beneficiary Member State under Article 13, an investment shall be deemed discontinued in either of the following cases:

Paragraph 2 shall apply to the modification of the disbursement decision, to the increase of the resources in the Modernisation Fund available to the Member State concerned, and to setting off the amount returned to the Fund against any future payment by the EIB to the Member State.

Article 11

Operation of the Investment Committee

On a proposal from the competent Commission department, the Investment Committee shall establish its rules of procedure which shall, in particular, lay down procedures for the following:

(a) appointment of members and observers to the Investment Committee, and their alternates;

(b) organisation of the meetings of the Investment Committee;

(c) detailed rules regarding conflict of interest, including the model declaration of interests.

Article 12

Asset management guidelines and agreement with the EIB

After consulting the Member States, the Commission shall enter into an agreement with the EIB laying down the specific terms and conditions under which the EIB shall perform its tasks in relation to implementation of the Modernisation Fund. Those terms and conditions shall cover the following tasks:

(a) auctioning and monetisation of the allowances destined for the Modernisation Fund, in accordance with Commission Regulation (EU) No 1031/2010 (²);

(b) management of the revenues from the Modernisation Fund;

(c) confirmation of the priority investment proposals under Article 6 and carrying out due-diligence of non-priority investment proposals under Article 7;

(d) providing the secretariat to the Investment Committee, including administration of a website dedicated to the Modernisation Fund;

(e) preparation of draft reports of the Investment Committee under Article 14.

CHAPTER III

MONITORING, REPORTING, EVALUATION AND AUDITING

Article 13

Monitoring, reporting and forward planning by the beneficiary Member States

Article 13a

Monitoring and reporting by non-beneficiary Member States concerning investments involving the adjacent Union border regions

Where the beneficiary Member State uses the resources allocated to it to finance investments involving the adjacent Union border region, the non-beneficiary Member State in which that region is located shall provide to the beneficiary Member State any information and documentary evidence that is necessary for the beneficiary Member State to comply with Article 13.

Article 14

Reporting by the Investment Committee

The annual report of the Investment Committee referred to in the first sentence of Article 10d(11) of Directive 2003/87/EC shall include the following information:

(a) the number of investment proposals received and investment proposals confirmed, including the specification of the investment area and the corresponding amounts;

(b) the number of recommendations issued, summary conclusions for each recommendation and the amounts of recommended investments;

(c) an overview of the main conclusions regarding the proposed investments following from the technical and financial due diligence carried out by the EIB;

(d) the practical experience on procedural aspects of issuing the recommendations;

(e) the main data and conclusions regarding the annual reports submitted by the beneficiary Member States in accordance with Article 13(1).

Article 15

Review and evaluation of the Fund

In the review referred to in the second sentence of Article 10d(11) of Directive 2003/87/EC, the Commission shall cover the following areas:

(a) confirmation of priority investments by the EIB;

(b) assessment of non-priority investments by the Investment Committee;

(c) financing and monitoring of investments by the beneficiary Member States;