Plans to establish new fund for environmental technology

The Nordic countries are at the forefront of environmental technology innovation.
Increased R&D spending in all the Nordic countries generates new inventions and
technologies, but it often takes time before these innovations are adopted and realize
their business potential.

Senior Manager Karl-Johan Lehtinen, who heads NEFCO’s environmental unit, talks about what NEFCO is doing to address this challenge.

NEFCO’s Board of Directors has authorised the administration to study the possibilities of investing in a new pilot fund aimed at financing Nordic environmental innovations. Why?
Existing technologies have not been able to solve pressing environmental
problems. This means that new technologies have to be devised. They will
help partner countries to solve common environmental problems and generate export revenues for the Nordic countries. It’s a win-win situation. That’s why we are carrying out this study.

Does this mean that NEFCO will shift its focus and start financing
research and development efforts on a larger scale?

Not really. NEFCO’s traditional role won’t change that much, but this kind
of fund will enable the corporation and other players to finance projects where
the technological use risk is included and economical as well as environmental
gains are favourable to both parties. NEFCO is not planning to be the lead
financier of the fund. The main challenge is now to find the anchor investors
and fund operators for this initiative.

What kind of business partners are you hoping to attract through this initiative?

There are a number of potential investors and business partners in the agricultural,
energy as well as the industrial sector in general. Geographically speaking we are focusing on projects, which will mainly be carried out in Russia, Ukraine and Belarus.

Can you mention a concrete example of a project, which would benefit from an additional push from this proposed fund?

The volume of poultry manure from chicken farms in the Leningrad Region in the vicinity of St. Petersburg and the Karelian Isthmus, in Russia, which is currently about 1.5 million tonnes per year, is increasing at an annual rate of 20 per cent. This effluent, like all run-off nutrients from various sources in the region, is responsible for the eutrophication
of the Baltic Sea.

Instead of treating this manure as waste, it could be transformed into valuable raw material for the energy and agriculture sectors. We have found a Swedish technology company that can solve this environmental problem by producing gas, oil and biochar out of the manure. If all goes well, the volume of manure would decrease by 90 per cent from 1.5 million to 150,000 tonnes per year.

What is needed before the proposed fund becomes operational?

We are currently looking for partners and various actors in the cleantech and venture capital sectors as well as governmental agencies that are interested in these kinds of ventures. For its part, NEFCO has to attract these players and gain the full support of its owners before it can proceed.

How would you describe the investment profile of the proposed fund?

The details are not fully worked out yet because we are not sure about what partners will join the fund. The geographic mandate will, of course, remain unchanged. The higher risk of technological innovation will obviously increase NEFCO’s current risk taking capacity.

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