Norway launches new climate investment fund for renewable energy in developing countries

AFRICA – Norfund, a development finance institution has been selected by the Norway’s government to manage the new climate investment fund that will be capitalized with NOK2 billion (US$208.36m) each year for the next five years

The fund will be Norway’s most important tool in accelerating the global energy transition by investing in renewable energy in developing countries with large emissions from coal and other fossil power production.

As with Norfund’s usual operations, the goal is to help activate investments “that would otherwise not be made”.

“We have no time to lose in the fight against climate change. Having operationalized the new climate investment fund in record time, the money can now be put towards crucial investments in renewable energy in developing countries,” said Minister of Development Anne Beathe Tvinnereim.

Norfund’s experience and network in the relevant countries has made it possible to quickly get started with the fund, following the Government’s decision to establish it in December last year.

Norfund will prioritize investments in the production and development of renewable energy, as well as areas closely tied to this, such as battery storage.

It will primarily invest in equity, with a 20-35% ownership interest, and the individual investments will be around 50-150 million dollars. The choice of investments will be governed by where Norfund has competence and can make the largest possible difference.

“The Climate Investment Fund will play a central role in fulfilling the Government’s ambition to double our annual global climate financing. I am confident that Norfund will manage the fund in such a way that we get the maximum climate effect out of every NOK we allocate,” said Tvinnereim.

Norfund has already announced what will be the first investment under the climate investment fund. The investment in the company H1 will finance large-scale wind and solar development in South Africa.

Based on an assessment of climate impact, additionality and feasibility, Norfund has chosen to prioritize South Africa, India, Vietnam, the Philippines, Cambodia, Indonesia, Sri Lanka and Bangladesh.

“In these countries, we have already identified investment opportunities of more than NOK 8 billion. We also remain open to future investments in other countries where we can have a high climate effect and work with strong partners,” said Thorleifsson.

Norfund will manage the Climate Investment Fund on behalf of the Ministry of Foreign Affairs. The investments under the Climate Investment Fund will be made under Norfund’s own name, but the fund’s investments and portfolio will be managed separately from Norfund’s other activities.

The board of Norfund is responsible for ensuring that the management is handled in line with the adopted framework for the fund. Norfund will prepare separate reporting and accounts for the fund, including contributions to expected and actual avoided greenhouse gas emissions.

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