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Financing innovative environmentally sustainable solutions

Financing innovative environmentally sustainable solutions. Karl-Johan Lehtinen Seminar iBSG Brussels , June 15th, 2011. The countrywise reduction targets of the BSAP. NEFCO in brief. Geographic mandate. I nternational financial institution established by the Nordic countries

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Financing innovative environmentally sustainable solutions

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  1. Financinginnovativeenvironmentallysustainablesolutions Karl-Johan LehtinenSeminariBSGBrussels, June 15th, 2011 Karl-Johan Lehtinen, Brussels, 15 June 2011

  2. The countrywise reduction targets of the BSAP Karl-Johan Lehtinen, Brussels, 15 June 2011

  3. NEFCO in brief Geographic mandate • Internationalfinancial institution established by the Nordic countries • Loans and equityinvestmentsfor environmentalprojects in Eastern Europe • Funds to a total value of EUR 460 million • Headquartered in Helsinkiwith 27 employees • Locallycontractedconsultants in Russia and Ukraine Helsinki Karl-Johan Lehtinen, Brussels, 15 June 2011

  4. Ourjourneysofar 2010– Over 400 projectsfinanced 1990 – NEFCO is established, firstsixprojectsfinanced in 1991 2008–2009 NEFCO CarbonFund, Nordic ClimateFacility and BSAP Fund 1996 – NEFCO'scapitalis doubled from €40 to 80 million 1995 – The Nordic EnvironmentalDevelopmentFund 2000–122 projectsfinanced in Eastern Europe 1990 2010 Karl-Johan Lehtinen, Brussels, 15 June 2011

  5. The Baltics ~160 projects Main sectors: water, cleanerproduction, energy, agriculture Russia ~150 projects Main sectors: energy, water, cleanerproduction Ukraine ~85 projects Main sectors: energy, cleanerproduction, agriculture Karl-Johan Lehtinen, Brussels, 15 June 2011

  6. NEFCO's instruments • NEFCO INVESTMENT FUND (RU, UKR, BR) • Equity investments • Loan on market terms, subordinated loans, mezzanine financing • NORDIC ENVIRONMENTAL DEVELOPMENT FUND (RU, UKR, BR) • Soft Loans, Contingency financing • Cleaner Production Lending Facility • Energy Savings Recycled Grants Programme • Agricultural Environmental Lending Programme • Social Energy Savings Loan Facility • OTHER FUNDS • NEFCO Carbon Fund • TGF Karl-Johan Lehtinen, Brussels, 15 June 2011

  7. NEFCO'sfundingresources Mikael Sjövall, Petrozavodsk, 31 May 2011

  8. NEFCO's emission reductions 09/10 Karl-Johan Lehtinen, Brussels, 15 June 2011

  9. Results of ourwork in 2010: CO2: 3 milliontonnes P: 1,251 tonnes SOx: 8,075 tonnes = 6.2 millionpeopleflyingfrom Helsinki to New York = untreatedwastewaterfrom 1.7 millionpeople = 1/10 of the total SO2-emissions in Finland in 2007 Karl-Johan Lehtinen, Brussels, 15 June 2011

  10. External funds • Nordic Investment Bank (NIB), 500 MEUR • The BSAP fund for TechnicalAssistance, financed by Sweden and Finland 110 MSEK aimed at supportingfeasibility studies and capacityimprovement to findbankableprojects • The TA-fund is managed by NIB/NEFCO and is available for countriesoutside NEFCO interest as well as for otherfinancing institutions Karl-Johan Lehtinen, Brussels, 15 June 2011

  11. Traditional NEFCO engagements • Municipal wastewatertreatment • Industrial emissions, bothwastewater and otherwastegenerated in the foodindustry and at large animal farms • Solid waste (i.e. Sillamäe, Estonia) Karl-Johan Lehtinen, Brussels, 15 June 2011

  12. Reality check • Financiersconcentrate on specificprojects, not programs • The sadreality: good programmes do not necessarilylead to projectfinancingwithoutidentification of real projects • After identification of bankableprojectsthey are included in the projectcycle of the financier Karl-Johan Lehtinen, Brussels, 15 June 2011

  13. Future challenges/possibilities Challenges: • Remaining problems in the wastewater sector • Large animal farms • Traditional agriculture Possibilities: • Integration of agriculture-waste-energy sectors into win-win solutions Karl-Johan Lehtinen, Brussels, 15 June 2011

  14. The need for applying new technologies • Conventionaltechnologies not enough to solveremainingenvironmentalissues • Demo projectsneeded • First step to conquer export markets • High value of demo projectsbeyondhome turf proving not onlytechaspectbutalsoadaptability, business models, financeability etc. Karl-Johan Lehtinen, Brussels, 15 June 2011

  15. Cost-efficiency of new solutions • The real challenge is to find the balance of environmentalbenefit and pay-back time. Example: • to replace 1 tonne CO2 using LED lightning at a cost of 10 EUR as compared with 130 EUR/tonne for improvedinsulation or 500 EUR for solar PVCs. • The logicwould be to buylamps for 500 EUR and reduce 50 tons Karl-Johan Lehtinen, Brussels, 15 June 2011

  16. Potential win-win solutions • Base-line: no use of food stuff for energyproduction. • Instead: use of waste from agriculture to enhanceclosed loops of nutrients and production of renewableenergy • Examples: biogas production from manure and otheragriwaste: recycling of nutrients and production of energy. Not applicableeverywhere Karl-Johan Lehtinen, Brussels, 15 June 2011

  17. Potential win-wincont. • Chicken manure for production of energy, biodiesel and biochar • Studyon-goingwithin the BSAP fund • Focus at existingpoultry farms at the Karelianishtmus in Russia Karl-Johan Lehtinen, Brussels, 15 June 2011

  18. Products obtained from pyrolysis of chicken manure Karl-Johan Lehtinen, Brussels, 15 June 2011

  19. Non-commercialfish • A catch of 10 000 tonnes/yearwouldmean 50 tonnesphosphorus removal at a cost of 4 MEUR • Correspondingcost for 1 t P removal from rural households is 4.3 MEUR • E.g. fisheryabout 50 timesmorecosteffective Karl-Johan Lehtinen, Brussels, 15 June 2011

  20. Legislation • May hamperuse of mostcost-efficient solutions sincedirectivescall for uniform application • Thus, Swedish or Finnish moneycouldreach far morebenefitsifinvested in Poland or Russia thanifinvested in SE or FIN • Establishment of a nutrient credit system couldalso be hampered by legislation • One way to enhancenutrientsalescould be the binding of dissolved P in Baltic deep water areas by aeration Karl-Johan Lehtinen, Brussels, 15 June 2011

  21. Thankyou for yourtime! Karl-Johan Lehtinen│karl-johan.lehtinen@nefco.fi │ +358 40 539 1239 www.nefco.org Karl-Johan Lehtinen, Brussels, 15 June 2011

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