Nordic Environment Finance Corporation (NEFCO)

Green Growth and Joint Venture Investments

Tallinn, 15 October 2010Magnus Rystedt

NEFCO in brief (1)

• International Financial Institution, established by the five Nordic countries in 1990

• Total funds 400 million EUR• NEFCO finances projects with beneficial impact on the environment.

providing loans and capital investments• Geographic mandate: Russia, Ukraine, Belarus, Estonia, Latvia and

Lithuania• NEFCO's environmental priorities: climate issues, the state of the Baltic

Sea and mitigation of toxic emissions, liquidation of environmental hot spots in the Arctic and Barents regions.

• 26 employees, 6 local consultants

NEFCO in brief (2)

• More than 400 projects approved • More than 50 waste water related projects in the BS area.• Managing several differnet funds. In addition to investment capability

this also includes TA funds and Carbon Funds; Testing Ground Facility and NEFCO Carbon Fund.

Specific relevance for the EU Strategy for the Baltic Sea Region:• Managing the BSAP Fund together with NIB. The TA fund amounts to

€11,6 million (Sweden and Finland are contributors) and aims to support implementation of projects relevant for the BSAP.

• NEFCO is involved with other IFI's (EIB, EBRD and NIB) in the Northern Dimension Environmental Partnership (NDEP) targeting environmental investments in NW Russia and Belarus. The NDEP support fund for env. projects amounts to €127 million and is managed by EBRD.

Projects

VARDAR EURUS

• Investment in renewable energy production in the Baltic countries

• Established 2004 by Vardar, a Norwegian utility company

• NEFCO shareholder from 2005

• Cooperation partner, Freenergy , a private Estonian investment group, EBRD shareholder from 2009

VARDAR EURUS - Investment Portfolio 264 MW Potential reduction of CO2 520 000 t/a• Estonia

– 10 windparks total capacity 135.4 MW – of which 2 parks under construction– 2 biogas projects under preparation – total annual energy production 24 000 MWh

• Lithuania– 4 windparks total capacity 78,9 MW– of which 3 parks under construction or preparation

• Latvia– 1 windpark of 50 MW capacity under preparation

EKORESURSAI

• Biogas extraction from old landfill in Kaunas region

• Owner New Heat (Finnish owners), Lithuania since 2004

• NEFCO granted subordinated loan

• Sale of ERUs precondition for viability

• Emission Reduction Purchase Agreement with TGF – approx.167 000 ton CO2eq

• Second stage of biogas extraction under preparation

BALTIC PORK

• Pig breeding, Latvia

• Owned by IPI, a Norwegian investment company

• Investing in biogas production – while doubling production

• NEFCO joining as shareholder and lender 2010

• Main environmental benefit • Cost efficient reduction of run off of nutrients from agriculture to the Baltic Sea • A priority area for NEFCO's investments in the Baltic countries

RINDIPOL Z.A.

• Switch from coal to biomass in small and medium sized district heating plants in northern Poland

• Established in 2003 as a Joint Venture between Rindi Energi AB (SE) and NEFCO

• NEFCO owns 35% of the company and Rindi Energi AB owns 65%

• Operates two DH plants, one in Chojnice and one in Hajnowka, that have been converted to use biomass instead of coal as fuel

RINDIPOL Z.A.

• Chojnice plant produces 87,000 GJ/year• Hajnowka plant produces 200,000 GJ/Year• Both plants will be extended to include electricity

production.• A separate bio-fuel trading company Biopal, has been

established to source all the biomass burned in the two installations from sawmills in Northern Poland

• It is envisaged that Biopal will import biomass from the forestry service sister company Rindibel in Belarus

• A total of some 8 MEUR has been invested in Rindipol and Biopal

Chojnice

Hajnowka