The Norwegian government is making a new fund available to developing countries to finance adaptation, resilience and mitigation of climate change through renewable energy. The funding mechanism will be managed by the Norwegian Investment Fund for Developing Countries (NORFUND).
Africa will be able to benefit from Norway’s newly launched climate investment fund. In short, it is a financing mechanism that will be capitalised annually to the tune of 2 billion Norwegian kroner (NOK), or more than 195 million euros. The management of the facility has been entrusted to the Norwegian Investment Fund for Developing Countries (NORFUND).
“The Climate Investment Fund will play a central role in realising the government’s ambition to double our annual global climate finance. I am convinced that Norfund will manage the fund in such a way that every NOK allocated will have a maximum effect on the climate,” says Norwegian Development Minister Anne Beathe Tvinnereim. According to the Norwegian government, the objectives of the new fund are to help reduce or avoid greenhouse gas (GHG) emissions by investing in renewable energy in developing countries with high emissions from burning coal and other fossil fuels.
Focus on South Africa
In line with the Oslo guidelines, NORFUND will give priority to South Africa in the management of the new fund. This is the African country where the need for GHG emission reductions is most urgent. The rainbow nation relies on coal for more than 80% of its electricity generation. As a result, South Africa is considered the biggest polluter on the African continent.
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So NORFUND will already be using some of the new fund’s resources to support its initial investment in H1 Capital. A few months ago, the Norwegian government’s financial arm joined forces with British International Investment (BII) to provide 600 million South African rand (more than $39 million) in funding to this South African renewable energy investment company.
In addition to South Africa, Norfund will use the new fund to invest in renewable energy in 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 (about EUR 787 million). We also remain open to future investments in other countries where we can have a significant climate effect and work with strong partners,” says Tellef Thorleifsson, Norfund’s Managing Director. The new fund will operate for five years.