Our own capital – Nefco’s Investment Fund

Nefco is owned by the five Nordic countries: Denmark, Finland, Iceland, Norway and Sweden. In 1990, when Nefco was established, all five owners paid in capital to Nefco’s Investment Fund.

Nefco’s Investment Fund is a for-profit revolving fund operating on market terms. The fund finances sustainable green growth projects. All earnings are retained for new investments. By the end of 2020, the size of Nefco’s Investment Fund was EUR 169.6 million. We can normally finance up to EUR 5 million for each project.

Nefco is substantially fully equity funded, but it has established one loan facility of EUR 30 million with the Nordic Investment Bank, for Nefco’s on-lending to a larger public project in Ukraine. Sweden provides a guarantee facility for partial coverage of the risk exposure related to public projects financed by Nefco’s Investment Fund in Ukraine.

Nefco’s Investment Fund is primarily used for financing the international scale-up of Nordic SMEs and on municipal projects in Eastern Europe.

Funds managed by Nefco

Nefco manages some 15 trust funds for financing programmes that target a specific country, region or type of investment. Activities under these trust funds are financed separately by one or more Nordic governments or through multi-donor facilities and programmes.

We have access to means of technical assistance through various trust funds to accelerate new investments and support project implementation. This is financed by our owners together or individually within their respective environmental and geographic focus areas.

We also blend our own funds with those of other financiers and donors to leverage, scale up and mobilise further investments.

By the end of 2020, the total value of all trust fund assignments managed was EUR 428 million. Below are some examples of our core fund activities. More information is available under the page Funds Managed by Nefco.

Multi-donor facilities and programmes

Nordic Environmental Development Fund

The Nordic Council of Ministers is the official body for Nordic intergovernmental cooperation. All of Nefco’s owner countries take part in this cooperation.

The Nordic Council of Ministers finances the Nordic Environmental Development Fund, established and managed by Nefco since 1996. The purpose of this fund is to support and supplement the financing activities of Nefco’s Investment Fund: (i) by making available grant financing to prepare and implement public projects financed by Nefco’s Investment Fund, and (ii) by creating the opportunity for Nefco to also offer smaller, concessionary loan programmes to help projects reach scale and facilitate subsequent financing of larger projects on commercial terms trough Nefco’s Investment Fund.

The Nordic Environment Development Fund’s loan programmes are revolving, but can gradually deplete due to the concessionary nature of the financing they provide. For this reason, the initial funds paid in during 1996 has regularly been replenished and by the end of 2018 stood at approximately EUR 24 million. The fund presently offers soft loans of up to EUR 500 000 for energy savings and cleaner production measures in several Eastern European countries.

Nordic Project Fund (Nopef)

The Nordic Council of Ministers also finances the Nordic Project Fund (Nopef), managed by Nefco since 2014. Nopef offers small grants for green growth to Nordic small and medium-sized enterprises and mid-cap companies for internationalisation. Nopef beneficiaries can also obtain limited investment loans on commercial terms through Nefco’s Investment Fund. Nopef is funded through annual contributions from the Nordic Council of Ministers. Since 2014, the fund has received a total contribution of EUR 14 million. Grant support of a maximum amount of EUR 50,000 is available for feasibility studies or demonstration projects aimed at evaluating the establishment of a foreign business or investment outside of the EU/EEA region.

Baltic Sea Action Plan Trust Fund (BSAP)

The reduction of pollutants negatively affecting the Baltic Sea is and has always been a key priority for Nefco’s Investment Fund. The Baltic Sea Action Plan Fund offers limited grant funding to accelerate and demonstrate necessary measures, that would not otherwise happen, to meet the nutrient reduction requirements of the Baltic Sea Action Plan, signed by Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland, Russia, Sweden and the EU in 2007. This fund was established in 2009, and is co-managed by Nefco and the Nordic Investment Bank and financed by Finland and Sweden. The latest funding round in autumn 2020 resulted in 15 new projects being funded.

Nordic Initiative for Energy Efficiency and Humanitarian Support – Ukraine (NIU)

This Nefco managed grant facility, the Nordic Initiative for Energy Efficiency and Humanitarian Support, was initiated by the foreign ministers of the Nordic countries in 2014 for small, but urgently needed investments to achieve quick and visible energy-efficiency results in public buildings within five regions in Eastern Ukraine. Funding of EUR 15 million to date comes from Finland, Norway, Sweden and the Nordic Environmental Development Fund. Under this initiative grants of between EUR 100 000 and 600 000 are also offered in combination with smaller soft loans, funded through the Nordic Environment Development Fund and in some cases additional grants funded through the Eastern Europe Energy Efficiency and Environment Fund (E5P).

Nordic Initiative for Cooperative Approaches

Through the Nordic Initiative for Cooperative Approaches, Nefco works together with the Nordic countries on supporting sustainable development and climate action in developing countries and promoting carbon pricing.

Nefco carbon funds (NeCF and NorCaP)

Nefco was an early mover in the carbon market and by 2003 had already established a pioneering carbon fund, the Baltic Sea Region Testing Ground Facility. This was the first multi-donor carbon fund outside of the World Bank Group. Later, this fund was converted into a Public-Private Partnership. Today Nefco manages two carbon funds: the Nefco Carbon Fund (NeCF) on behalf of a number of both public and private investors, and the Nefco Norwegian Carbon Procurement Facility (NorCaP), in which Norway is the only investor. At its peak, NeCF was capitalised at EUR 165 million, but due to the decline in the carbon market the fund stood at EUR 62 million by end of 2018.

Bilateral facilities and programmes


Since 2015, the Danish Ministry of Foreign Affairs has financed an initiative for the promotion of energy-efficiency awareness and demonstration projects in Georgia. The aim of this fund is to help Georgia in delivering on its National Determined Contribution (NDC) submitted under the Paris Agreement and comply with requirements under the Association Agreement it has with the EU. The initiative forms part of a larger neighbourhood support programme funded by the Danish Ministry of Foreign Affairs.

In 2020 Denmark, through the Ministry of Foreign Affairs joined as donor to the Beyond the Grid Fund for Africa (BGFA) programme to support the expansion to and activities in Uganda.


In 2017, on behalf of the Ministry for Foreign Affairs of Finland, Nefco set-up, and now manages the Finland Ukraine Trust Fund, promoting cooperation between Finland and Ukraine in the fields of energy efficiency, renewable energy and waste-to-energy and smart energy systems. Limited grant funding is available for both public and private demonstration projects implemented by Ukrainian, preferably small and medium-sized enterprises, or for technical assistance. The fund will be replenished until the end of 2021.


In 2019, building on good experiences with the Nordic Initiative for Energy Efficiency and Humanitarian Support – Ukraine (NIU) and alongside separate initiatives by other Nordic countries, Nefco was asked to establish the Norway-Ukraine Energy Efficiency Initiative (NUEE). This facility will offer investment grants, primarily tied to Nefco loans, as well as project preparation and implementation support to projects in any part of Ukraine, but priority will be given to projects in the eastern part of the country.

The Nefco Norwegian Carbon Procurement Facility (NorCaP) was established in 2013 in response to the desire of the Norwegian government to ensure the continuation of emissions reduction activities of existing, but vulnerable, carbon credit projects, as many of these projects were facing discontinuation due to low carbon prices. At the same time, this would assist Norway in meeting its climate commitments in a cost-effective way. Procurement under this fund was 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. Many of these projects are still on-going. By the end of 2018, NorCaP had delivered 15.2 million emission reductions to Norway.


In the beginning of 2019, Nefco established a new and larger facility for the Swedish International Development Cooperation Agency (Sida), the Beyond the Grid Fund for Africa (BGFA), to incentivise the development of new private sector business models offering affordable and clean energy access at scale to people living in rural and peri-urban areas in Africa. This facility forms part of the ‘Power Africa’ initiative launched by former US President Barack Obama and contributes to the Sustainable Development Goal 7 as well as the Paris Agreement on Climate. So far three Call of Proposals (BGFA1, BGFA2 and BGFA3) have been announced.

In 2021, Sweden and Nefco announced a new programme in Africa, the Modern Cooking Facility for Africa (MCFA), which is a new groundbreaking results-based financing programme that aims to scale-up access to higher tier clean cooking solutions in peri-urban and urban areas in Sub-Saharan African countries.

In 2010, Sweden established the DemoUkraina District Heating Facility managed by Nefco, offering grant financing in combination with soft loans financed by the Nordic Environment Development Fund to support the development and funding of a large number of small environmentally sustainable energy-efficiency demonstration projects within the district heating sector spread across a number of Ukrainian cities. Financing is given to municipal district heating utilities with a guarantee from the city. Funds are still available under this facility. In 2018, this initiative was supplemented by the establishment of a new trust fund, the Sweden-Ukraine District Heating Fund for grant financing of project develop and investment grant co-financing for the implementation of a number of larger scale demonstration projects together with loan financing from Nefco’s Investment Fund. Aim being to demonstrate ways to use renewable and waste heat sources, ultimately meeting EU’s requirements for efficient district heating in Ukraine.


Accreditations and Nefco as an implementing agency

European Union

Nefco has a long history of implementing environmental projects with EU co-financing. In 2016, our high fiduciary standards were formally recognised when we passed the European Commission’s so-called “pillar assessment” for entities entrusted with implementation of the EU budget. In 2022, Nefco passed the assessment of the four new pillars defined by the EU Financial Regulation in 2019.

Presently, we are acting as an implementing agency for the following facilities, which are co-funded by the EU: the Eastern Europe Energy Efficiency and Environment Partnership (E5P), the EU Neighbourhood Investment Platform (NIP) and the Northern Dimension Environmental Partnership (NDEP). Investment grants made available through these facilities, in combination with grant financing we manage on behalf of our owners for project preparation and implementation, have enabled us to offer Nefco Investment Fund loans even to smaller and financially weaker cities in Eastern Europe, mainly Ukraine.

The Green Climate Fund

In September 2018, Nefco was also accredited by the Green Climate Fund (GCF). This accreditation is expected to offer new opportunities for us to blend our own financing and other funds we hold in trust, now including funds from the Green Climate Fund, as well as create new innovative financing packages together with other accredited entities to further mobilise and scale up the capabilities of developing countries to grow in a sustainable way. The Green Climate Fund, the world’s largest climate fund, was set up in 2010 by the 194 countries partied to the United Nations Framework Convention on Climate Change (UNFCCC), with the aim to help developing countries limit or reduce their greenhouse gas emissions and adapt to climate change. It seeks to promote a paradigm shift to low-emission and climate-resilient development, taking the needs of nations that are particularly vulnerable to the impacts of climate change into account.