Norwegian development finance institution, Norfund, this week announced that the country’s Climate Investment Fund is now operational. Established in December last year, the fund will be Norway’s most important tool in accelerating the global energy transition by investing in renewable energy in developing countries with large emissions from coal, and other fossil power production.
South Africa has been selected as one of the eight countries Norway’s newly launched Climate Investment Fund will target investments in. Other countries selected include India, Vietnam, the Philippines, Cambodia, Indonesia, Sri Lanka and Bangladesh.
“In these countries, we have already identified investment opportunities of more than NOK 8 billion. We also remain open to future investments in other countries where we can have a high climate effect and work with strong partners,” said Tellef Thorleifsson, Norfund’s CEO.
The fund will be capitalised with NOK 2 billion (US$209 million) each year for the next five years, and will be managed by Norfund. Norfund says it will prioritise investments in the production and development of renewable energy, as well as areas closely related such as battery storage. The fund will primarily invest in equity, with a 20-35% ownership interest, and the individual investments will be around 50-150 million dollars.
Earlier in the year, Norfund collaborated with UK’s CDC Group (now British International Investment) to invest ZAR 600 million in H1 Capital (Norfund ZAR 360 million and CDC ZAR 240 million) – a South-African Black-owned and managed renewables investment and development company. The funds will help finance H1 Capital’s pipeline of over 2.4 GW of new wind and solar projects in South Africa.
Norfund will manage the Climate Investment Fund on behalf of Norway’s Ministry of Foreign Affairs. The investments under the Climate Investment Fund will be made under Norfund’s own name, but the fund’s investments and portfolio will be managed separately from Norfund’s other activities.
“We have no time to lose in the fight against climate change. Having operationalized the new climate investment fund in record time, the money can now be put towards crucial investments in renewable energy in developing countries,” said Norway’s Minister of Development, Anne Beathe Tvinnereim.
“The Climate Investment Fund will play a central role in fulfilling the Government’s ambition to double our annual global climate financing. I am confident that Norfund will manage the fund in such a way that we get the maximum climate effect out of every NOK we allocate,” added Tvinnereim.