Towards a climate neutral EU:
efficient allocation of EU funds

Mistake to avoid: public funding of renewables and energy efficiency improvement for SMEs with any activities, e.g. car saloons

Organisation: Clean Air Action Group, Hungary Website: Added: July 14, 2023
Project start date: November 11, 2019
Project end date: June 30, 2021


The project was part of the Economic Development and Innovation Operational Programme, with the goal of subsidizing the use of renewable energy and the energy efficiency improvement of buildings of small and medium enterprises (SMEs), in order to decrease their prime energy consumption and GHG emissions. A total of 102 million EUR was dedicated to 500-2000 SMEs, between ~4.200 to 270.000 EUR per project, up to 55% of the total investment costs. The subsidy was provided to SMEs with almost any activities, for example, a car saloon received 90.000 EUR for the installation of a 49.77 kWp solar PV system and the complete thermal insulation of the building's façade, the insulation of the slab and the replacement of the windows. Therefore, within this program private companies received discretionary funding from public funds, which harms competition and leads to market distortion, and it is especially unnecessary in the case of remunerative investments, such as, energy efficiency improvements, which can be easily financed using private financial sources. Furthermore, companies with basically any activities - including environmentally harmful activities, such as car commerce - were subsidized.

Financial data

Total: 102 mio EUR (38,22 billion HUF) EU contribution: 102 mio EUR (38,22 billion HUF), the non-refundable subsidy cannot exceed 55% of the investment costs


  • Energy efficiency improvements are remunerative investments, with a relatively quick return on investment, for the funding of which the private financing sector is also largely available. Therefore such investments should be supported from public funds only in case of public entities (healthcare, education, etc.) or in the residential sector for vulnerable households, while private companies should be incentivized to implement such investments using private financing.
  • In general, discretionary funding to private companies should be stopped, as they harm competition and cause undesirable market distortion, and increase the corruption risks for competition. It is especially recommended not to subsidize any companies which carry out practices seriously damaging the environment, such as the manufacturing and commerce of cars.

Information sources;

Other info

European Climate Initiative (EUKI)
This project is part of the European Climate Initiative (EUKI). EUKI is a project financing instrument by the German Federal Ministry for Economic Affairs and Climate Action (BMWK). The EUKI competition for project ideas is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It is the overarching goal of the EUKI to foster climate cooperation within the European Union (EU) in order to mitigate greenhouse gas emissions.