Nordic Environment Finance Corporation (NEFCO)
Environmental problems know no boundaries. Luckily, neither do solutions. The Nordic Environment Finance Corporation (NEFCO) was established in 1990 to finance environmental projects in Central and Eastern European countries. NEFCO prioritizes projects that reduce releases of climate gases, improve the ecological status of the Baltic Sea or mitigate release of toxic pollutants.
The State Unitary Heat Enterprise TEKOS' control room in Murmansk. NEFCO has offered a bridge loan to TEKOS in order to upgrade the central heating system in Murmansk.
In 1990 the governments of Denmark, Finland, Iceland, Norway and Sweden signed an agreement to establish the Nordic Environment Finance Corporation (NEFCO) as part of the Nordic region’s environmental co-operation. NEFCO’s original purpose was to reduce pollution in the Nordic region by creating local capacity for producing environmental services and equipment in Central and Eastern European states bordering the Nordic countries.
NEFCO's portfolio currently comprises nearly 350 small and medium-sized projects spread across different sectors, including: chemical, mineral and metals, food and engineering, agriculture, water treatment, power utilities, municipal services, waste management, nuclear remediation, environmental management and environmental equipment manufacturing. NEFCO is currently active in Russia, Ukraine, Estonia, Latvia, Lithuania and may also participate in projects in Belarus.
Learn more about projects NEFCO is involved in.
To provide the capital necessary to support projects, NEFCO works with a series of different funding bodies.
NEFCO Investment Fund
The Investment fund amounts to approximately 114 MEUR. The fund provides loans and equity financing. In some cases subordinated loans and loans with equity features can also be provided. The loans are from medium to long term, and are provided at market conditions.
Nordic Environmental Development fund – NMF
Through this fund, originally established by the Nordic Ministers of Environment in 1995, NEFCO is endeavouring to support the realization of projects that otherwise would not materialize or could be realized only later in the future. Local participation in the financing is required. Contributions from the fund can be provided as grants for the procurement of goods or services (cash subsidies) or to reduce the borrower's debt service costs. The maximum grant is one-third of the total project cost. The capacity of the fund is approximately DKK 300 million.
Environmental Hot Spots in the Barents Region
NEFCO has a special mandate to work with environmental issues and projects in the Arctic and the Barents regions. One of the important financial tools for doing this is the Barents Hot Spots Facility (BHSF), which is managed by NEFCO on behalf of the Governments of Finland, Iceland, Norway and Sweden.
Carbon Finance and Funds
The Baltic Sea Region Testing Ground Facility (TGF), is a fund, which provides financial assistance to projects, primarily by purchasing emission reduction credits. The TGF was established at the end of December 2003 by the governments of Denmark, Finland, Iceland, Norway and Sweden, pledging an aggregate capital of € 10 million. In 2004, Germany committed further € 5 million. The TGF will invest in projects with a potential for delivering cost-effective ERUs and AAUs for the account of the investors.
NEFCO Carbon Fund (NeCF)
The NEFCO Carbon Fund (NeCF) is a global carbon fund based on a Public Private Partnership model, launched in April 2008. Vested in the form of a trust fund administered by the Nordic Environment Finance Corporation, it is an instrument for purchasing greenhouse gas emission reductions under the joint implementation (JI) and clean development mechanism (CDM).
Arctic Council Project Support Instrument
In March 2005, the Arctic Council established the Project Support Instrument (PSI), a financial initiative that aims to focus on actions preventing pollution of the Arctic. NEFCO
was appointed as the Fund Manager. The PSI is a mechanism for financing specific priority projects already approved by the Arctic Council. The intention is to invite interested Arctic Council member states, observers and others to pledge contributions to the Arctic Council Project Support Instrument.
Project Specific Funds
NEFCO administers several special purpose funds on behalf of different donors, for the specific support of certain projects. Among the list of donors to these project specific funds are the Nordic countries, the Dutch Government, the Nordic Council of Ministers, EU Phare (the enlargement assistance programme), the Swedish Energy Agency and the Global Environmental Fund (GEF) through the Helsinki Commission (HELCOM). NEFCO has for these project specific funds been assigned a total of EUR 83.3 million, of which EUR 23.4 million represent completed funds.
Further reading
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