NEFCO is able to provide carbon financing in the form of additional revenues to projects by monetising the value of greenhouse emission reductions generated through the use of the Kyoto Mechanisms, namely Joint Implementation and Clean Development Mechanism. The credits from these projects are used for compliance with the obligations of the Kyoto Protocol and the EU Emissions Trading Scheme. The main operating funds are the NEFCO Carbon Fund (NeCF) and the Baltic Sea Region Testing Ground Facility (TGF).

In addition to the management of carbon procurement vehicles, NEFCO is also active in other areas of climate change mitigation and adaptation. Since 2009, NEFCO has been cooperating with the Nordic Development Fund (NDF) to administer a technical assistance facility, the Nordic Climate Facility, and in August 2010, launched another joint initiative, the ProClimate Guarantee Facility. These facilities are active in the developing world, including many of the least developed countries (LDCs).

NEFCO is also active in cooperation with other institutions active in the climate mitigation space. This includes extensive cooperation with regional Nordic and bilateral (member country) initiatives such as the Danish Ministry of Finance funded project “Nordic Perspectives on Carbon Mechanisms”, and a Study on Nordic opportunities in the emerging sectoral crediting mechanisms and scaling up of climate initiatives, both of  which address possible opportunities in the post 2012 world. More widely, NEFCO is part of the UNEP-BFI Climate Partnership, which includes institutions such KfW Development Bank, AFD, JICA and the EIB, and maintains a dialogue with UN institutions and the multilateral development banks.

Read our carbon finance and funds operational review for 2009