Greece Launches Island Decarbonization Fund to Promote Green Transition

Photo source: HRADF

An agreement establishing the Island Decarbonization Fund, aimed at reducing the Greek islands’ reliance on polluting energy sources, was signed Thursday on Naxos.

The agreement, signed by the Ministry of Environment, the European Commission, and the European Investment Bank in the presence of Prime Minister Kyriakos Mitsotakis, directs European funds toward supporting decarbonization.

During his speech, Mitsotakis emphasized that Greece’s green transition should be leveraged as a competitive advantage. He explained that the fund would use emissions trading revenues to finance large-scale projects that promote sustainability and improve residents’ quality of life.

“We are not leaving anyone behind,” Mitsotakis remarked, highlighting that the fund represents a crucial tool for Greece’s island communities. He noted that the Southern Aegean, including Naxos, has seen significant population growth and development due to tourism.

Sustainable investments for the future

Greek Prime Minister Kyriakos Mitsotakis. Photos source: Prime Minister’s press office

The Decarbonization Fund, set to launch in 2025, will support renewable energy projects and connect islands to the mainland electricity grid. Mitsotakis stressed that these initiatives would provide stable, low-cost electricity, reduce dependence on high-emission energy, and ensure energy security.

“We aim to power desalination plants with renewable energy soon,” Mitsotakis added, also mentioning plans to install electric vehicle chargers and “cold ironing” facilities at island ports to support sustainable tourism.

The Islands Decarbonization Fund

Photos source: Prime Minister’s press office

The fund will receive financing through emissions rights sales, expected to generate 1.6 billion euros, with potential for more funding if emissions prices rise. Over the next eight years, the fund is expected to attract additional investments more than double its value.

The fund will support three key categories:

– Renewable energy and storage: At least 50 percent of funding will go toward Renewable Energy Sources (RES) installations and storage systems on the islands.
– Island interconnections: One-third of the budget will support connecting islands to the national electricity grid, including the major interconnection of the Dodecanesse islands, initially Kos, Rhodes and Karpathos.
– Energy infrastructure: Remaining funds will support projects integrating renewable energy with national grids, including electric vehicle chargers and “cold ironing” at ports.

Additionally, the fund will back the GR-Eco Islands initiative, expanding the green island model beyond the three current pilot projects.