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The way forward - NDF’s Climate Change Strategy 2012-2013

A summary of NDF’s Climate Change Strategy 2012-2013 is available on NDF’s website: www.ndf.fi

N o r d i c D e v e l o p m e n t F u n d

Two and a half years havepassed since the NordicDevelopment Fund (NDF)adopted its climate man-date, which enabled NDFto provide financial sup-port to developing coun-tries in the area of climatechange and development.As of December 2011,NDF has approved 39projects including fivefacilities for a total valueof EUR 106.6 million.

A new Climate ChangeStrategy has been deve-loped for the period of2012-2013. “These firstyears have provided NDFwith experience and earlylessons learned that havehelped to refine NDF activities,” says NDF’sDeputy Director, LeenaKlossner. NDF’s focusover the next two yearswill be to further conso-

lidate experiences fromon-going climate inter-ventions. NDF intendsto sharpen its project selection to activitieswhere NDF can addvalue beyond the finan-cial contribution throughleverage and synergies.In addition, as a Nordicinstitution, NDF willcontinue to promoteNordic priorities in thearea of climate changeand development. Fur-thermore, through revi-sion of the monitoringand evaluation guide-lines as well as develop-ment of a project perfor-mance rating system,NDF will enhance itsfocus on efficient and results-oriented imple-mentation of the exist-ing commitments.

"I am impressed with the way in which NDF hasstarted to implement the mandate. Their activitiesto date have been consistent with overall Nordicclimate change policies and priorities," says theDanish Minister for Development Cooperation, Mr. Christian Friis Bach.

NEWSLETTER

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NDF supports five new climate change projects in Latin America

Currently, NDF is financing12 climate change projectsin the Latin American region.Five of these where approvedduring the December 2011Board meeting.

NDF is financing two climatechange programmes that aimto benefit small and medium-sized enterprises (SMEs) in Latin America; GREEN-PYME II and EcoMicro. SMEs play a critical role inthe economic development ofthe developing world. Theyare the engine of economicgrowth, providing employ-ment and counting typicallyfor about one third of GDP.Energy efficiency is one ofthe most cost-effective andimportant tools to enhancethe competitiveness of SMEs.

The ongoing, NDF co-funded, GREENPYME pro-gramme in Central Americahas been advancing well. Ithas received a lot of recog-nition for its relevance andpotential to help SMEs to cuttheir energy costs and at the same time reduce theirgreenhouse gas emissions.NDF will also participate inthe financing of the second

phase of the programme;GREENPYME II. The sec-ond phase will build on thework done and experiencesgained under the first phase.It will enable the scaling up of the on-going GREEN-PYME programme in Central America by intensi-fying activities in Hondurasand Nicaragua, and by ex-panding the programme toBolivia and the DominicanRepublic. “The expansion of the GREENPYME pro-gramme will further in-crease energy efficiencyin the Latin American re-gion and it will bring sub-stantial economic benefitsto thousands of additionalSMEs,” says Hannu Eerola,Country Program Managerat NDF. The Inter-AmericanInvestment Corporation(IIC) will continue to imple-ment the programme, forwhich NDF will provideEUR 3 million.

Together with the Multi-lateral Investment Fund(MIF), NDF is with a grantof EUR 1.5 million finan-cing a microfinance pro-gramme (EcoMicro). Themain objective of the pro-

gramme is to facilitate theuse of green finance instru-ments by micro, small andmedium-sized enterprises(MSMEs). This will help theMSMEs to increase theiraccess to clean and efficientenergy products and serv-ices, and help them adapt tothe coming changes. One ofthe key objectives is also totrain microfinance institu-tions (MFIs) in providingnew green finance instru-ments in order to capita-lise on new opportunitiesin clean energy financing,adjust their risk manage-ment models to climatechange risk and incorpo-rate climate impact intotheir internal policies andoper- ations. “It is the firstever initiative aimed at bring-ing the microfinance indus-try into the climate changearena. Lessons learned willprovide important input for future microfinance activities in Latin Americaand other regions,” says Leena Klossner, Deputy Director at NDF.

Another project that NDFis implementing togetherwith the Multilateral Invest-

ment Fund (MIF) is the Biogas Market DevelopmentProgramme. This pro-gramme aims to develop asustainable biogas indus-try in Nicaragua to helpagricultural micro, smalland medium-sized produc-ers and rural householdsto access renewable energy.Biogas is a proven and com-mercially viable alternativeenergy source, utilised bysmall farmers in manyparts of the developingworld. Similar programmeshave been implemented inseveral Asian countrieswith great success. How-ever, this programme is thefirst example of a compre-hensive biogas developmentprogramme in Latin Amer-ica. The dairy sector hasbeen selected as a marketentry point to pilot the biogas potential. The pro-gramme aims to improveproductivity, cut costs andreduce the carbon and envi-ronmental footprint of thedairy sector. NDF’s contribu-tion to the programme isEUR 1.5 million.

Geothermal energy is another renewable energy

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Nordic Partnership Initiative in Vietnamlaunched in Durban

NDF has approved a grantof EUR 1.5 million for theNordic Partnership Initiativein Vietnam. NDF and otherstakeholders launched theNordic Partnership Initia-tive at COP17 in Durban.The main objective of theinitiative is to demonstratehow developing countriescan prepare and implementNationally Appropriate Mitigation Actions (NAMAs),which make use of interna-tional finance and possiblenew market mechanisms.The initiative intends to in-crease Vietnam’s readiness to benefit from internationalclimate finance by exploringand addressing ways to

decrease greenhouse gasemissions in the cementsector.

The cement sector hasbeen chosen as the pilot sec-tor since it is the largestemitter of industrial green-house gases in Vietnam.There are currently approx-imately 50 cement plantsand 100 production lines in the country. The sectors’emission reduction poten-tial has been estimated to be significant.

“The project will supportpractical preparatory workrelating to NAMAs andgenerate insight into newmarket mechanisms. Viet-nam will thus be a forerun-

source with huge potentialin several Central Americancountries. Contrary to someother renewable energysources like solar, wind andhydro, the output of a geo-thermal plant is stable irres-pective of weather conditionsor time of the day. To helpthe countries further de-velop their geothermal re-sources, the Inter-AmericanDevelopment Bank (IDB)and NDF are financing a Geothermal Training Pro-gramme in Central America.The total cost of the pro-gramme is EUR 2.7 million,of which NDF will financeEUR 1.5 million. The gen-eral objective of the pro-gramme is to increase thelocal knowledge and skills inspecific aspects related to ge-othermal potential, explo-ration, planning andutilisation. It is expected thatthe programme will help in-tensify geothermal researchand development and thusgradually increase the shareof geothermal energy in the region.

IDB and NDF are alsojoining forces to implementactivities related to chal-lenges posed to urban settle-

ments by climate change in Latin America. The Sus-tainable Cities Project willfinance three studies focu-sed on the development ofclimate change actionplans for cities in Hon-duras, Nicaragua and Bolivia. The project will develop and implement amethodology that will allowthe cities to identify, priori-tise and select sectors andactions specifically relevantto foster adaptation, as wellas sectors and activities thathave a significant emissionreduction potential. Thefindings obtained in themethodology developmentprocess will be used to de-velop concrete action plans.By helping to guide deci-sion-makers in the imple-mentation of cross-sectoralclimate change mitigationand adaptation actions, theproject will increase thebeneficiary cities’ awarenessand knowledge of climatechange. NDF’s contributionto this project is EUR 2.1million.

ner in the field of bringingadded value beyond exist-ing mechanisms,” saysMartina Jägerhorn, Coun-try Program Manager atNDF. The Asian Develop-

ment Bank is the PartnerAgency and Vietnam’s Ministry of Construction isthe Implementing Agency.Implementation is expectedto start during 2012.

GRANT FINANCING FOR CLIMATE CHANGEPROJECTS IN LOW-INCOME COUNTRIES

The Nordic Development Fund (NDF) provides grant financing for climatechange interventions in low-income developing countries. NDF is the joint development finance institution of the Nordic countries—Denmark, Finland, Iceland, Norway and Sweden—and finances projects in cooperation with otherdevelopment institutions.

NORDIC DEVELOPMENT FUND, P.O. Box 185, FIN-00171 Helsinki, Finland (Visiting address: Fabianinkatu 34), Tel: +358 10 618 002, Fax: +358 9 622 1491, E-mail: info.ndf@ndf.fi, www.ndf.fi

Nordic Development Fund

NDF Newsletter presents NDF's operations. The newsletter is published as needed. Layout Kubik, print Erweko Oy.

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During 2011, NDF approved financing for 18 projects with a total value of approximatelyEUR 32.5 million. So far, NDF has approved 39 projects, totalling EUR 106.6 million, under the climate mandate. Africa is still the leading beneficiary of NDF financing as 42% is goingto the region. 30% and 28 % are going to Latin America and Asia respectively.

With a EUR 0.5 milliongrant, NDF, together withthe World Bank, will sup-port a study on low-car-bon technologies in Africa.The continent has vastpotential of largely un-tapped low-carbon energysolutions, such as wind,solar and geothermal,

which, if utilized, could ac-celerate electrification inAfrica. The study intendsto review both new and existing low-carbon tech-nologies and then prioritisethose that appear most pro-mising in technical, institu-tional and financial terms.The lack of access to finan-

Low-carbontechnologiesin Africa

Projects approved 2011

cing low-carbon technolo-gies has considerably limited the adoption of suchtechnologies in Africa.Therefore, the study willalso evaluate the viabilityof new conventional andinnovative financing in-struments for these typesof technologies.