Annual Review 2017 Nordic Environment Finance Corporation
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Nordic Annual Environment Review Finance 2017 Corporation NEFCO 2017 1 NEFCO 2017 Contents Highlights of the year 2017 3 NEFCO in brief 4 Interview with the Managing Director 6 The Arctic and Barents Region 7 Case study 1 Reduction of short- lived climate pollutants 10 The Baltic Sea 12 Climate change 13 Case study 2 Finnish trust fund for energy efficiency and renewable energy 16 Green growth 18 Report from the Board of Directors 2017 19 Case study 3 New facility for electric vehicles 22 Environmental status report 2017 27 Emission reductions in 2017 28 Statement of comprehensive income 29 Statement of financial position 30 Changes in equity 31 Cash flow statement 32 Independent Auditor’s Report 33 Case study 4 Equity investments in the Baltics 36 Statement by the Control Committee 37 Case study 5 Implementation of energy-efficiency measures in public buildings 38 Approved projects 2017 41 Case study 6 Innovative plastic recycling from the fishing industry 42 NEFCO in numbers 2017 Personnel and Board members 2017 2 NEFCO 2017 JANUARY APRIL JUNE Highlights NEFCO and the Danish The new Nordic-Russian The amended NEFCO company Rus Agro Team Programme for Environ- Agreement and statutes of the year A/S sign a loan agreement ment and Climate enters into force and aimed at introducing a Co-operation (PECC) opens up for a broader 2017 range of investments launches its first calls for geographical scope for the that will result in envi- proposals. Corporation's investment ronmental benefits at activities. the company’s farm in MAY - the Kaliningrad region in NEFCO and the Russian LLC NEFCO and the Republic of Russia. Novgorod Timber Company Moldova sign a framework Sodruzhestvo sign a loan agreement acknowledging FEBRUARY agreement to modernise NEFCO’s status as an inter- The Finnish John Nurminen wood processing produc- national financial institution Foundation joins forces tion in Nebolichi in the in Moldova. with NEFCO to co-finance Novgorod region in Russia. a biogas plant in Lviv, - JULY Ukraine. The Arctic Council Project NEFCO and AS BaltCap ↓ Support Instrument (PSI) sign a Subscription Managing Director Magnus MARCH approves two major projects Agreement for an equity Rystedt signing the framework NEFCO and the Belarusky aimed at reducing the release investment in a new agreement with the Deputy Narodny Bank (BNB-bank) of short-lived climate pol- infrastructure fund for the Prime Minister Octavian Calmic sign a loan agreement for lutants from the oil and gas, Baltic States investing in from the Moldovan Ministry of the development of an and fisheries sectors in the energy efficiency and re- Economy. electric vehicles facility. Russian Arctic. newable energy projects. PHOTO: CAROLINA STURZA, MINISTRY OF ECONOMY OF THE REPUBLIC OF MOLDOVA OF REPUBLIC THE OF ECONOMY OF MINISTRY STURZA, CAROLINA PHOTO: AUGUST NOVEMBER The Nordic Project Fund NEFCO arranges a side PHOTO: PKS PHOTO: (Nopef) has approved event on how to mobilise financing for 43 new projects green investments for so far in 2017 for a total value smart solutions at the UN of approx. EUR 1.3 million. Climate Summit (COP23) on 14 November in connection SEPTEMBER with the Nordic Finance NEFCO and the Ministry Day. of Natural Resources and - Environment of the Russian NEFCO’s updated Environ- Federation sign a Memo- mental and Sustainability randum of Understanding Guidelines are published. to improve the ecological - situation at the Krasny Bor NEFCO and the Ministry for landfill area in the region of Foreign Affairs of Finland St Petersburg. sign an agreement to set - up the Finland Ukraine NEFCO signs grant agree- Trust Fund, which will ments with the cities of provide financial support Druzhkivka, Pershotravensk to energy-efficiency and PHOTO: NEFCO, JOEL SHEAKOSKI JOEL NEFCO, PHOTO: and Svatove for energy- renewable energy projects efficiency measures in public in Ukraine. buildings through the Nordic Energy Efficiency and Hu- DECEMBER manitarian Support Initiative The wastewater treatment for Ukraine (NIU). plant in Petrozavodsk, the capital of Russian Karelia, is OCTOBER inaugurated. NEFCO, as fund manager for - ← PSI, signs a grant agree- NEFCO and the Ministry of Sarunas Stepukonis, BaltCap; Karoliina Auvinen, ment with the Conservation Finance of Ukraine sign a Aalto University; Shawn Brown, Ignitia AB; Tom of Arctic Flora and Fauna loan agreement for energy- Erichsen, Differ AS; and Peter Keller-Larsen, (CAFF) to improve the status efficiency investments in CLEAN discussing at NEFCO's side event at the of declining Arctic breeding several higher education UN Climate Summit. migratory bird populations. institutions in Ukraine. - ←← NEFCO approves nine projects within the new Matti Iikkanen, Pöyry, Kari Homanen, NEFCO, PECC programme aimed at Jana Selkova, Pöyry, Vitaly Artyushchenko, improving the state of the NEFCO and Sebastian Påwals, NIB at the environment and addressing inauguration of the wastewater treatment climate change in North- plant in Petrozavodsk. west Russia. The Nordic Environment Finance Corporation The amended NEFCO Agreement that 01 (NEFCO) is an international financial insti- entered into force in June 2017 opens up tution established in 1990 by the five Nor- the possibility for NEFCO to broaden its dic countries: Denmark, Finland, Iceland, investment activities geographically and Norway and Sweden. to approve projects also outside Eastern NEFCO NEFCO’s green financing is targeted Europe. The Corporation’s trust funds, in- at small and medium-sized projects and cluding those aimed at climate projects in brief focuses on generating environmental ben- and SME internationalisation, have until efits through these project implementa- now been the only financing instruments tions. Many of the projects financed by operating with a global scope. NEFCO will NEFCO are characterised by a pioneering now be able to explore new ground by pro- spirit and aimed at testing Nordic solu- viding loan capital and equity for relevant tions with up-scaling possibilities. Based green growth investments of interest to on its experiences from the field, NEFCO the owner countries. has participated in the development of in- novative financing instruments designed NEFCO’s current main priorities: to improve the environment and combat ● To enhance existing activities and climate change. initiate new interventions related to NEFCO has developed an ability to as- green investments and the promotion sist borrowers efficiently in the identifica- of green growth tion, development, implementation and ● To prevent climate change with a administration of environmental projects focus on interventions related to and to make them attractive also to other renewable energy, energy efficiency financiers. The Corporation works in close and the reduction of short-lived cli- partnerships with both private and public mate pollutants investors. ● To continue the successful activities All projects to be financed by NEFCO need targeting the reduction of pollutants to demonstrate that they will benefit the en- affecting the Baltic Sea and the Arctic vironment in a cost-effective way. To ensure and Barents Regions that these benefits will in fact materialise, financing is released in tranches against To achieve this, NEFCO will continue to monitored milestone results, and environ- work closely with its owners, the Nordic mental outcomes are monitored annually for countries, governmental institutions, EU, as long as NEFCO is involved. This approach relevant business sectors, as well as other effectively mitigates the risk of corruption international financial institutions. and increases the requirements for borrow- ers’ capacity building, transparency and ac- countability. It also ensures improved pre- dictability and sustainability of the project. NEFCO 2017 3 How would you sum up NEFCO’s results 02 in 2017? We have had a lot of investment activities and new trust fund assignments in 2017. NEFCO’S MANAGING DIRECTOR A total of 123 projects were approved to a total value of EUR 50.8 million. A large Interview with number of the approved projects relate to energy efficiency and renewable energy. Magnus Rystedt During the past year nine projects were approved within the new Programme for Environment and Climate Co-operation in Northwest Russia. A new Finnish initiative to finance projects in the areas of energy efficiency, renewable energy and alterna- tive energy sources in Ukraine with NEFCO as a fund manager was signed in Novem- ber. During the year, NEFCO also signed a framework agreement with the Republic of Moldova. However, a significant step was that the amended NEFCO Agreement entered into force, which enables the Cor- PHOTO: PATRIK RASTENBERGER PATRIK PHOTO: poration to invest in activities globally. Managing Director Magnus Rystedt. 4 NEFCO 2017 Within which sectors will NEFCO work in How will NEFCO support the Nordic the future? governments with their national goals to reach the SDG targets? NEFCO will continue working with energy NEFCO's goal and climate investments over the com- NEFCO can support the Nordic govern- ing years. Thanks to the Paris Agreement ments in their work on the sustainable is to reach global awareness of the ongoing climate development goals through project identi- more synergies change is increasing and investments re- fication and implementation as well as in between its lated to both mitigation and adaptation financing projects, where there are scale- activities will increase. More modern, en- up possibilities. investment vironmentally friendly and efficient tech- What will NEFCO's main activities be and trust fund nology will also be implemented, especially in 2018? activities in close in NEFCO’s main countries of operation. Through our financing activities and in- The main priority for NEFCO, in addition to collaboration with vestments, we will focus on contributing the normal investment and project work, the owners; the to the green transition. will be to identify and develop new projects Nordic countries, within NEFCO Global as well as to develop Within which focus areas will NEFCO’s new initiatives within the fund manage- and cooperation trust fund management assignments lie ment. The goal is to reach more synergies in the future? partners.