MEPs voted overwhelmingly in favour of an agreement struck last month to create a fund to finance projects including renovating Europe's buildings to improve their energy efficiency, grid-connected renewable energy generation, electric vehicles and energy-saving local infrastructure like smart grids and electricity storage.
The fund will get a total of €146.34 million left over from the €3.98bn European Energy Recovery Plan once the deadline for committing money to priority projects has expired at the end of the year.
In the first instance, the plan earmarked money for gas and electricity interconnections, carbon capture and storage (CCS) and offshore wind farms. But MEPs insisted on a mechanism to use any unspent money for energy efficiency and innovative renewables projects to counterbalance the billions given to traditional energy sources.
The new fund will serve primarily local and regional authorities to promote decentralised energy and save energy. The money will be disbursed as loans, guarantees, equity and other financial products and will be paid back to the fund.
The fund will still need to be rubber-stamped by member states in the Council before the money can be made available from January 2011.
However, Green MEPs criticised the final sum agreed for being too low in comparison to what CCS projects in polluting power stations will be given under the recovery plan.
MEP Claude Turmes (Luxembourg; Greens) also raised concerns that hundreds of millions of euros of EU recovery funds could in the end be returned unused to member states' budgets because the six chosen CCS projects will not be in a position to allow the money to be committed by the end of the year.
"For the moment, this kind of innovative fund is limited to energy, but I hope that in the future it could represent the start of a new and fundamental principle which can be transposed in other sectors such as transport, with much greater budgets and public-private partnerships," said European People's Party MEP Antonio Cancian (Italy), a shadow rapporteur on the file.