European finance for the Mediterranean energy transition is still largely project-based, and in this brief, Karim Karaki and Alfonso Medinilla set out how the next EU budget and European financial institutions can mobilise private capital, finance whole industrial ecosystems and build ‘Made with Europe’ partnerships that serve both European and partner-country interests.
Summary
Investment in renewable energy, electricity interconnections, hydrogen value chains and industrial ecosystems across the Mediterranean is increasingly part of the EU’s competitiveness, energy security and industrial transition agenda. These objectives often align, but not automatically, and European financing instruments are not yet equipped to contribute to some of these objectives and manage the trade-offs.
Drawing on consultations and a closed-door roundtable, this brief sets out four priorities for the next generation of Mediterranean energy finance instruments (including those related to public procurement), including under the 2028-2034 multiannual financial framework.
(1) Mobilising investment at the required scale demands a shift from balance-sheet lending toward capital-recycling mechanisms, including originate-to-share models and securitisation. Developing a common MENA energy-transition asset class, with shared standards and metrics, would deepen secondary markets and attract private finance at scale.
(2) Moving from single-project to ecosystem financing is equally essential: hydrogen, grid infrastructure and industrial development cannot be addressed in isolation, and European institutions need more integrated, portfolio-based investment approaches.
(3) Coordination platforms such as the Trans-Mediterranean Renewable Energy and Clean Tech Initiative (T-MED) hold real promise, but their effectiveness will depend on integrating lessons from good practices, sustained policy dialogue, early political commitment and coordinated pipeline development, while adapting to the different circumstances of other partner countries.
(4) On European content and procurement rules, the EU must clarify its requirements and provide a predictable transition, as regulatory ambiguity already imposes costs. The EU should explore additional public procurement tools such as strategic project origination beyond eligibility restrictions.
About the Authors:
Karim Karaki is the head of ECDPM’s economic recovery and transformation team.
Alfonso Medinilla is the head of ECDPM’s climate action and green transition team. He focuses on the geopolitics of the global green transition and renewable energy.