NEFCO is and has been involved in a number of activities specifically focused on climate change mitigation, including carbon and climate finance and also adaptation and sustainable development.

Current key activities include the management of two carbon facilities NEFCO Carbon Fund (NeCF) and NEFCO Norwegian Carbon Procurement Facility (NorCaP) on behalf of public and private sector investors. NeCF and NorCaP currently represent a portfolio of 18 ongoing Clean Development Mechanisms (CDM) projects spread across different sectors in 9 countries. These funds are currently in portfolio administration mode until final deliveries after the end of 2020.

NEFCO Carbon Fund

Building on the capacity and competence through the management of the Baltic Sea Region Testing Ground Facility (TGF), NEFCO established a global Public-Private Partnership carbon procurement vehicle: the NEFCO Carbon Fund (NeCF) in 2008. NeCF acquires greenhouse gas emission reductions under the Joint Implementation (JI) up to 2012 and the Clean Development Mechanism (CDM) until the end of 2020.

The fund’s public and private investors consist of European power utilities and Nordic governments. At its peak, NeCF was capitalised at EUR 165 million. After the market changes in 2011–2012, NeCF’s activities were consolidated and the active procurement paused.

When NorCaP launched a second call for proposals in 2014 on behalf of Norway, four projects under CDM in least developed countries were contracted under NeCF.

NeCF has contracted a total of 22 projects that have so far delivered 6 million emission reductions.

NEFCO Norwegian Carbon Procurement Facility

The global NEFCO Norwegian Carbon Procurement Facility (NorCaP) was established in 2013 in response to a wish for the Norwegian government to ensure the continued emission reduction activity of existing, but vulnerable, CDM projects. Many registered CDM projects were facing discontinuation due to low market price. At the same time, NorCaP assists Norway in meeting its climate commitments in a cost-effective way.

NorCaP purchases Certified Emission Reduction Units (CERs) from the second commitment period of the Kyoto Protocol (2013–2020). The facility is wholly funded by the Norwegian Ministry of Climate and the Environment.

Ten projects or bundles of vulnerable projects were successfully contracted based on the first call for proposals, and the first credits acquired within one calendar year. In December 2014, a second joint call for proposals under NorCaP and NeCF was launched.

NorCaP attracted significant interest from project developers, with almost 350 project proposals, demonstrating that strong demand remained in the market. NorCaP also showed that emission reductions could be sourced cost-effectively.

Procurement has been closed at the end of 2015 when the facility reached its target through NEFCO’s contracting of some 30 million CERs from 17 projects in Latin America and Africa. Projects have so far delivered 15.2 million emission reductions.

Past activities

Key past activities include the Baltic Sea Region Testing Ground Facility (TGF) – mainly for the procurement of emission reductions via Joint Implementation (JI) mechanism under the Kyoto Protocol. NEFCO was a very early actor in the project-based carbon markets. Through the multilateral energy cooperation in the Baltic Sea Region (BASREC), NEFCO took the initiative to set up a pioneering regional carbon fund in 2003.

TGF was the first multi-donor carbon fund outside the World Bank Group. The first participants in TGF were the Nordic governments and Germany, but the fund converted itself into a Public-Private Partnership by welcoming nine private participants, primarily from the energy sector. Energy companies were seeking compliance units to meet their obligations under the EU Emissions Trading Scheme (EU ETS). It was ultimately capitalised at EUR 35 million. TGF ended its activities in 2015 with 11 implemented JI projects and 2.6 million carbon credits delivered to the investors.

NEFCO also operationalised and managed the Nordic Climate Facility (NCF) between 2009 and 2018. NCF provides grants with co-financing requirements to encourage and promote technological innovations in areas susceptible to climate change in low-income countries, including both adaptation and mitigation projects. Today NCF is financed and managed by the Nordic Development Fund (NDF). The total value of the NCF application rounds 1–4 with 51 completed projects was EUR 35.2 million, when co-financing is included. Grant funding from NCF amounted to EUR 19.5 million.

What is CDM?

The United Nations Framework Convention on Climate Change (UNFCCC) established the Clean Development Mechanism (CDM) with two objectives: to support sustainable development and to allow emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of carbon dioxide. The CDM utilises UN approved methodologies to produce CERs that can be used for compliance with commitments made under the Kyoto Protocol, an international agreement that set binding targets for 37 developed nations to reduce their GHG emissions. CERs can also be utilised in a limited way in the European Emissions Trading Scheme.

CDM is primarily meant to support sustainable development as approved by the host countries. CERs can be used for compliance schemes. All issued carbon credits are certified under a UN registered scheme, kept in relevant registries, and transferred directly from that register to the recipient’s register. CDM Certification schemes are designed to prevent double-counting.

NEFCO’s carbon finance is based on the Kyoto Protocol compliance scheme and is not as such compensation or offsetting, which are often voluntary schemes offered to consumers and a wider range of companies. Credits from CDM schemes are acquired from project activities, which are additional, that is, which go beyond what would otherwise had been done in the absence of the project and which reduce emissions in the project country. Investors can decide whether to cancel the credits (= net mitigation) or use them for compliance (e.g. under the EU Emissions Trading Scheme) or for compensation – typically under voluntary targets. Projects can also generate emissions reduction beyond their agreed crediting periods leading to further net mitigation. NEFCO contracts only directly from project owners of projects that are registered, monitored, certified and issued in full compliance with all requirements under the United Nations’ Clean Development Mechanism (CDM).


Helle Lindegaard

Vice President, Beyond the Grid Fund for Africa

+358 10 6180 664
Danish, English, Swedish, Finnish, French

Kari Hämekoski

Senior Programme Manager

+358 10 618 0660
Finnish, English, Swedish

Tina Nyberg

Programme Manager

+358 10 6180 651
Swedish, Finnish, English