EFK, Alm.del - 2014-15 (2. samling) - Bilag 9: NEFCO News juni 2015

Energi-, Forsynings- og Klimaudvalget 2014-15 (2. samling)
EFK Alm.del Bilag 9
Offentligt

NEFCO News

Information Bulletin published by the Nordic Environment Finance Corporation, NEFCO

1 15

JUNE 2015

Waste becomes

energy in Vitebsk

The waste disposal site in Vitebsk will

produce around 6,000 megawatt hours

of electricity per year.

FEATURE STORY / PAgES 8-11

News

Column

FEATURE STORY

ARTICLE

NEFCO signs

framework agree-

ment with Belarus

→4

Cleaner waters

in the Gulf of

Finland

→7

BNB-Bank

finances fuel-

efficient

lorries

→ 16

New study on

climate financing

in low-income

countries

→ 20

EFK, Alm.del - 2014-15 (2. samling) - Bilag 9: NEFCO News juni 2015

From the Editor

Contents

News in brief

Finding the path to

sustainable consumption

Patrik rastenberger

EUTROPhiCATiON

Breakthrough.

NEFCO signs frame-

work agreement with Belarus.

→ Page 4

consumption, we would need two planet Earths to provide sufficient resourc-

es. We are living beyond our ecological means, consuming raw materials in a

rich biodiversity. Of the 150 countries studied, the Nordic countries are alarm-

ly not a flattering picture of the European

countries that has been painted in WWF's

report. The wonders of industrialisation

essential to invest in green growth and

cleantech to promote environmentally-

sustainable development.

Less nutrients to

the Baltic Sea

The discharges

of phosphorus and

nitrogen to the Baltic Sea have de-

creased by 23% and 18%, respectively, in

the past 15 years, shows a new report

from the Baltic Marine Environment

Protection Commission (HELCOM). Ac-

cording to the HELCOM nutrient re-

duction scheme, for example the Baltic

Proper received around 55,000 tonnes

less nitrogen annually during 2010-2012

as compared to the previous reference

period 1997-2003. The report was pub-

lished in May in Tallinn.

here is currently a lot of

talk about the need to develop circu-

lar economies in order to move away from our disposable culture.

We have to make more careful use of our precious natural resources

flows. The WWF's most recent Living Planet report established that

by recycling as well as investing in sustainable energy and material

if all the developing countries began to follow Western patterns of

Carbon credits.

NorCaP contracts

ten projects and 18.86 million CERs.

→ Page 6

Cleaner waters.

The phosphorus

load in the Gulf of Finland has

decreased by 60%.

→ Page 7

Energy efficiency.

Brickworks in

Vitebsk saves energy by investing in a

new gas-fired co-generation plant.

→ Page 12

way that exceeds nature's renewal abilities by around 30%. This is depleting our

ingly high in the rankings of environmental footprint per capita. It is certain-

Transport.

BNB-Bank lends capital

to companies purchasing fuel-efficient

lorries.

→ Page 16

New report.

Additional private finance is needed

to ensure sufficient funding of climate

projects in low-income countries.

→ Page 20

"We are living be-

yond our ecological

means, consuming

raw materials in a

way that exceeds na-

ture's renewal abili-

ties by around 30%."

also have a dark side. Consequently, it is

ENERgY

Emission reductions.

NEFCO's

climate investments in 2014 reduced

CO2-emissions by 5.2 million tonnes.

→ Page 23

●School

children in

eastern

Ukraine will benefit from the

Nordic energy efficiency and

humanitarian support initiative.

stitutes and international organisations

emphasise the financial sector's key role

An increasing number

of research in-

in restructuring the global production

Ivano-Frankivsk

upgrades its district

heating system

The municipal

enterprise Ivano-

Frankivsk Teplokomunenergo in west-

ern Ukraine and NEFCO have signed

a loan agreement aimed at modernis-

ing the city’s district heating system.

The demonstration project will focus

on the installation of 39 individual heat-

ing substations in the Dovga-Karpatska

district in Ivano-Frankivsk.

The investment is financed by

Ivano-Frankivsk Teplokomunenergo,

DemoUkrainaDH and NEFCO.

DemoUkrainaDH is a funding pro-

gramme established by NEFCO in co-

operation with E5P, Sida and the

Ministry of Regional Development,

Construction and Municipal Economy

of Ukraine.

of a perpetual economic growth are highlighted in the Worldwatch Institute's

patterns. Problems related to the belief

report State of the World 2015. "Economic growth drives most environmental

problems, and it has produced a world in which human activities have grown

too large for the planet to accommodate them sustainably. Forests are scalped,

rivers run dry, species are going extinct, and humans are changing the climate,

all driven by the pursuit of growth,” says the institute.

This newsletter includes

a focus on creating energy from waste. We visit-

nanced a total of five similar projects in both Belarus and Russia. We also made

Vireo is extracting methane from the local landfill site. The company has fi-

ed the town of Vitebsk, in north-eastern Belarus where the Swedish company

Finland allocates funds for

energy efficiency

that it will pledge EUR 3 million to the new-

ly-established grant funding programme,

by Finland’s Secretary of State, Peter Sten-

COvER STORY → PAgE 8

the Nordic energy efficiency and humanitar-

ian support initiative. The pledge was voiced

lund, at a donor conference in Kiev 28 April.

REPlENiShMENT

the acquaintance of a brickyard, which has successfully minimised its energy

consumption. The local BNB-Bank in Minsk has provided capital loans to local

companies which renew their machinery and equipment by purchasing large

goods vehicles which use less fuel, reducing emissions and improving the com-

pany's profitability. Investing in the environment pays off.

The Finnish Government

has announced

tarian support initiative currently has funds

to a total value of EUR 5.6 million. Further

The initiative has so far allocated funding

The Nordic energy

efficiency and humani-

allocations to the fund will be made in 2015.

for projects in the cities of Berdiansk, Lozo-

erzhynsk.

vo, Pavlograd, Kramatorsk, Severodonetsk,

Izum, Chuhuiv, Kupyansk and Dniprodz-

“We are pleased by Finland’s contribu-

Mikael Sjövall

Communications

Manager

NEFCO

Waste is transformed

into energy at the

landfill in Vitebsk,

Belarus.

The initiative is

funded by the Nordic coun-

tries and administered by NEFCO. The assis-

tance from this fund is provided primarily for

nicipal buildings in the war-torn, vulnera-

ble areas of Eastern and Southern Ukraine.

health centres.

Emphasis will be placed on social infrastruc-

the refurbishment and reconstruction of mu-

tion, as this will enable us to identify and

finance a larger amount of projects than we

ment Manager Amund Beitnes from NEFCO.

had anticipated earlier,” says Senior Invest-

Cover photo

Patrik rastenberger

“There’s only one

Arctic and all of us

must join together

to ensure responsible

stewardship of this

incredible region.”

ture, such as schools, day care centres and

U.S. Secretary of State John F. Kerry

at the Artic Council´s ministerial meet-

ing in Iqaluit, Nunavut, Canada 24 April

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News in brief

Patrik rastenberger

●The

St. Peter and

Paul Cathedral

sur-

rounded by Soviet style

architecture in Minsk.

ShiPPiNg

Support for LNG-fuelled

containerships

NEFCO and

the Finnish company Con-

tainerships Ltd have signed an agree-

ment on a convertible capital loan

aimed at purchasing two new LNG-

powered container vessels for traf-

fic in the Baltic Sea. The ships in ques-

tion will mainly be transporting goods

to and from Russia. The investment in

usage of liquefied natural gas will re-

duce emissions of sulphur and nitrogen

oxides by at least 99 per cent. Moreo-

ver, the project is expected to cut emis-

sions of carbon dioxide by some 8,000

tonnes annually..

REPlENiShMENT

Belarus pledges new

funds to NDEP

The Government

of Belarus has de-

cided to pledge it’s second voluntary

contribution of EUR 1 million to the

Northern Dimension Environmental

Partnership (NDEP). The decision was

announced by Deputy Prime Minister

Vladimir Semashko in May.

●Climate

smart

agricultural practices

in Kenya.

NCF signs new agreements

FIVE FURTHER AGREEMENTS

on inclusive

Nordic Climate Facility’s fourth call.

The agreements are the second batch of

green growth have been signed under the

12 approved projects that have been select-

by the Nordic Development Fund (NDF)

and administered by NEFCO. The facility

co-financing requirements for climate-re-

lated projects in low-income countries in

Africa, Asia and Latin America.

provides grants up to EUR 500,000 with

The Nordic Climate Facility is funded

ed for funding under NCF4. Three agree-

ments were signed in late 2014. The total

budget for the five new projects is EUR 1.8

by the project partners.

million; 60% is covered by NCF and the rest

gREEN gROwTh

NEFCO signs framework agreement

with Belarus

NEFCO and the

Belarusian government have signed a framework

agreement acknowledging NEFCO’s status as an international fi-

pave the way for a substantial increase of NEFCO’s lending op-

erations in the country, not least within the municipal sector.

nancial institution in Belarus. The signing of the agreement will

NEFCO has financed environmental projects in Belarus since

ities and municipal enterprises to invest in energy efficient tech-

nologies by utilising the loans that we can provide for such in-

charge of NEFCO’s lending operations in Belarus.

"We hope that this agreement will inspire Belarusian municipal-

vestments," says Senior Investment Manager Ulf Bojö, who is in

disbursed by NEFCO’s two main financial instruments, namely

Fund. Last year NEFCO’s Board of Directors approved five projects

for Belarus. The bulk of these investments relate to energy effi-

ciency improvements in the private sector.

The Belarusian loans currently account for 3.9 per cent of funds

lEgAl STATUS

diSSEMiNATiON

Seminar on energy

efficiency in Kiev

In March,

NEFCO and the Consul-

tancy Agency FIATU LLC hosted a sem-

inar in Kiev on the newly established

Nordic Energy Efficiency and Human-

itarian Support Initiative Fund. The

seminar was attended by municipal

decision-makers and included pres-

entations on upcoming projects in

a range of cities in Eastern Ukraine.

NEFCO’s loan application procedures

were highlighted by Chief Investment

Adviser Julia Shevchuk.

2007. However, these operations have been rather limited due

to the lacking framework agreement, which has prevented

ly approved EUR 9.3 million for the financing of 12 private sector

projects in Belarus.

NEFCO from financing ventures such as municipal energy effi-

ciency and wastewater treatment projects. NEFCO has so far on-

the Investment Fund and the Nordic Environment Development

"The business and finance communities must turn

climate action into “an opportunity for employ-

ment, against poverty and for democracy."

Ségolène Royal, French Minister

of Ecology, Sustainable Development and Energy at

Climate Week Paris, 21 May 2015

4 JUNE 2015 nefco newsletter

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Heli Sinkko

EFK, Alm.del - 2014-15 (2. samling) - Bilag 9: NEFCO News juni 2015

News in brief

Ukraine

Column

ENERgY

Shutterstock/M.Shcherbyna

Substantial energy sav-

ings in Dnipropetrovsk

NEFCO and

the public joint-stock com-

pany Dneprotiazhmash have signed a

loan agreement aimed at upgrading the

manufacturing process at the compa-

ny’s factory in Dnipropetrovsk. JSC Dne-

protiazhmash produces machinery pri-

marily for the ore mining and process-

ing industry.

The project envisages the installa-

tion of new gas burners as well as a cen-

trifugal compressor and a scroll com-

pressor equipped with a frequency con-

verter. Moreover, the investment will

enable the company to reconstruct its

heat treating furnace.

These measures will help JSC Dne-

protiazhmash to reduce its gas con-

sumption by around 237,000 cubic me-

tres annually. This in turn will generate

favourable environmental results in the

form of reduced emissions of carbon di-

oxide by around 3,478 tonnes per year.

Polluter pays or voluntary

trading of nutrients?

director Marjukka Porvari from John Nurminen Foundation calls for

measures aimed at mitigating discharges of nutrients in belarus.

Recent years have

been a rewarding time in the protection

of the Baltic Sea. Improved wastewater treatment in St Pe-

phorus at the fertiliser factory on the Luga River in Russia

CARbON CREdiTS

tersburg and actions taken to prevent the discharge of phos-

are now bearing fruit. In just a few years, it has been pos-

sible to reduce phosphorus loading in the Gulf of Finland

by more than 60%. Observations made by research bodies,

ordinary people with summer homes and yachters alike all

bear testimony to the impacts of the “Gulf

of Finland miracle”. For example, not even

the hot weather in summer 2014 triggered

massive blue-green algal bloom in the east-

out the summer.

ern part of the Gulf of Finland and the wa-

ter remained clear and algae free through-

sions trading scheme where the benefit gained in the form

than the resources used.

of increased recreational value of the Baltic Sea is far greater

Reducing point-source loading

– i.e. discharges of munic-

ipal and industrial wastewater – is still the quickest and most

effective way to reduce nutrient loading of the entire Baltic

ble with new treatment plants built with

Sea. Populous Poland and the Baltic States can still do much

EU support. The difficult political situation

and decline of the rouble have hampered en-

from the viewpoint of the state of the Bal-

wastewater discharges originating from the

issue as far as the sea is concerned.

tic Sea, political relations will not diminish

vironmental co-operation with Russia, but

Russia’s key significance here. Cleaning the

Kaliningrad and Leningrad regions is a key

NorCaP contracts ten

projects

A total of

18.86 million certified emis-

sion reduction units (CERs) have been

contracted from ten projects under the

Norwegian Carbon Procurement Facil-

ity’s first call. The contracted projects

were selected from 232 project propos-

als. The key criteria for the selection

were vulnerability and cost effective-

ness.

NorCaP was established by the Nor-

wegian Government in September

2013, with NEFCO as the Facility Man-

ager. The principal objective of Nor-

CaP is to prevent the reversal of emis-

sion reduction activities by procuring

iNvESTMENT

to treat wastewater as effectively as possi-

gRANTS

New funding for

feasibility studies

The Nopef

credit committee has since

January 2015 approved to fund 30 feasi-

bility studies to be carried out by Nordic

small and medium-sized enterprises.

The total value of these grants is

EUR 969,000.

Nopef has currently 30 projects in the

pipeline that will be evaluated by the

end of June.

The average length of a feasibili-

ty study is 1.8 years, after the granted

company decides whether it will estab-

lish local presence in the project coun-

try, for example through a subsidiary or

joint venture. Nopef gives priority to pro-

jects that support the development of

environmental technology and renewa-

ble energy.

The Nordic Project Fund (Nopef)

was established by the Nordic coun-

tries in 1982 and is today administered

by NEFCO and financed by the Nordic

Council of Ministers.

credits from projects whose survival

or continued emission reductions de-

pend on a higher carbon price than

achievable under current market con-

ditions (“vulnerable projects”).

A second call was launched in Sep-

tember 2014, which received 112 pro-

posals from 27 countries by December

last year accounting for some 107 mil-

lion CERs offered. A number of pro-

ject proposals have been selected and

are currently under due diligence re-

view with the aim of being contracted

at the latest during the second half of

2015.

This change for

the better in the state of

great achievement, which tells that it pays

tection and to have clear performance tar-

gets in mind. It is easy to define the indi-

and nitrogen.

the Baltic Sea during our own lifetime is a

to act strategically in environmental pro-

cator in the successful combat against eu-

trophication: fewer tonnes of phosphorus

"It has been pos-

sible to reduce

phosphorus load-

ing in the Gulf of

Finland by 60%."

Similar large-scale possibilities

to re-

- a poor state without access to the Baltic Sea

duce discharges can also be found in Belarus

and no benefits whatsoever from improve-

is crucial especially for the Baltic Proper. Thus

ments in the state of the Baltic Sea. Howev-

Marjukka Porvari

Director

John Nurminen Foundation

it makes sense for us inhabitants along the

loading in Belarus.

referred to in environmental protection.

However, it’s not worth going down that

path as regards protection of the Baltic Sea.

Studies show that both Finland and Swe-

den, which are also among the wealthiest

states in the catchment area, suffer most

The “polluter pays”

principle is often

er, reducing the nutrient load from Belarus

northern coast of the Baltic to support meas-

ures aimed at mitigating the point-source

Loan for energy efficient piping solutions

NEFCO and the

Danish company

Salling Plast A/S have signed a loan

agreement aimed at establishing pro-

duction of shrinkable casings, fittings

and assembly bends for pipes to be

used in district heating and wastewa-

ter treatment projects.

A new production line will be set up

in Orsha in eastern Belarus to boost

the company’s production and provide

sustainable piping solutions for the

Belarusian market. The environmen-

tal benefits from the investment will

arise from reduced thermal heat loss

when the piping solutions are put into

use. Moreover, Salling Plast relies on

recycling in the production. For exam-

ple the polyethylene high-density resi-

dues are granulated and reused in the

production process.

from the consequences of eutrophication. The treatment of

wastewater in St Petersburg was improved largely with Rus-

sian money, although also the Finns and Swedes invested

their own small share in the improvement. The result is a

clear Gulf of Finland, the ensuing recreational benefits of

neighbour, albeit a more distant one from our own perspec-

In protecting the

Baltic Sea, helping a

tive, is often the most sensible course of action. Let’s call it

ing political and economic times, co-operation is more chal-

lenging, but nevertheless it is worth remembering its impor-

tance for the Baltic Sea.

trading of discharges or just neighbourly help. During try-

which are far greater than the costs involved. Activities have

thus been rational on all sides, a kind of voluntary emis-

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vitebsk

Znamensk

● Project Manager

Jesper

Nyqvist is in charge of Vireo

Energy's investment in

methane extraction at

the landfill in Vitebsk.

Waste

transformed

into energy in

Vitebsk

The nauseating stench of rotting food scraps is

unmistakable – and the gulls have come to the same

conclusion as they swoop around us in large flocks in

search of easily-caught food. “One man's meat is another

man's poison” as the saying goes. We are at the landfill

site outside Vitebsk in north east Belarus. Project

Manager Jesper Nyqvist from the Swedish company Vireo

Energy is showing us round to demonstrate how they

produce electricity from rubbish.

Photos

Patrik rastenberger

wASTE MANAgEMENT

Only a few

days ago, this same site was

flooded by the intense spring rains. That

that has to be trampled down by rubber

in baggage. Thankfully Vireo Energy has

wetness has now turned into a sloppy mud

boots – which isn't really the type of equip-

ment you think to pack in your small cab-

a few pairs of overflow boots precisely for

smart shoes and a suit.

"Here you can

see the wells where we

pump up the methane stored in the depths

of this site," says Jesper, pointing to a num-

started with several test pumps at five dif-

ber of pipes creating a semi-circle in the

ferent locations which took around two

there was plenty of methane and great op-

Rotting organic matter

and food waste,

with its anaerobic oxygen-poor conditions,

creates methane, which is a key contribu-

ide, methane has the greatest impact on

the greenhouse effect. One kilo of meth-

tor to climate change. After carbon diox-

ane has the same impact as 21 kilos of car-

landfill sites. As the methane is dewatered

and incinerated and fossil fuel is

furthest section of the landfill site. "We

months. The pumping activity showed that

portunities to produce electricity," he adds.

lending to inappropriately-dressed visitors,

bon dioxide. A proportionally large share

thinking they could visit the landfill site in

of the global methane emissions occurs at

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vitebsk

replaced by electricity from the landfill,

climate-changing emissions are reduced.

In other words, there are considerable en-

vironmental gains for the landfill site in

Vitebsk.

contributed with financing of Vireo's op-

erations in Belarus. "According to our cal-

ane emissions to the order of 32,000 car-

bon dioxide equivalent units," says Sen-

Helsinki.

culations, these projects will reduce meth-

ior Manager Karl-Johan Lehtinen who runs

NEFCO's environmental department in

Vireo's biogas reactor

in Vitebsk is esti-

has the capacity to produce and sell both

mated to produce around 6,000 megawatt

heat and electricity, but for now they are

hours of electricity per year. The company

only selling electricity to the regional elec-

tric grid company. "There is a newly-built

over there on the left, on the road to Or-

housing suburb only a few kilometres from

the site. You can see the apartment blocks

tall roofs. "We could have delivered heat-

at the moment the infrastructure and pipes

ed natural gas instead," he explains.

aren't in place, and so the local construction

Last year, Vireo

signed investment con-

Brest and Mogilev. "In many respects, Bela-

tracts for equivalent projects in Grodno,

rus is an emerging market for energy com-

try. There is huge potential to increase the

says Jesper. "However, the opportunities to

share of renewable energy in this country,"

extract methane are not unlimited. It is

not possible to produce heat and electrici-

be enough rubbish that has been there for

decades in the same location. There must

be at least 1-2 million tonnes of rubbish in

order to create a single megawatt hour of

electricity. In reality, this means that this

type of business is only profitable when it

is close to larger towns and cities with at

least 100,000 inhabitants."

ty at every single landfill site – there has to

panies and firms in the cleantech indus-

“We run a busi-

ness dealing with

recycling of paper,

glass, card and

plastic.”

Sergey Makarov

CEO

Vitebeskaya Musoro-

sortirovotchnaya Stantsiya

sha," says Jesper pointing to a cluster of

ing to the apartments in the new area, but

companies benefit from relying on import-

The project in

Vitebsk is not Vireo's on-

ly achievement in Belarus. The company's

CEO, Robert Domaradzki explains via email

that Vireo has successfully completed simi-

lar projects in Orsha and Gomel. Final com-

missioning of a newly built plant has been

done in Novopolotsk to lay the ground for

have been realised with the help of loan fi-

production of renewable energy. All projects

nancing from NEFCO. Swedfund has also

"We intend to be the

leading producer of

renewable energy in

eastern and central

Europe," says CEO

Robert Domaradzki

at Vireo Energy."

Despite Vireo's project,

with its ef-

ficient and effective methane recovery,

waste management at the site in Viteb-

But there are

rumblings of change in

Vitebsk. At the entrance to the site, in a

to sort rubbish. Small business owner Ser-

paper, glass, card and plastic.

"We sell all polymer plastic to a factory

gey Makarov runs a business dealing with

in Novopolotsk. They pay around USD 200

per tonne of plastic that we send to them,"

says Sergey. "We also bale up cardboard and

around USD 70 per tonne," he adds.

send those bales to a paper factory paying

Close to this

facility is Vireo's buzzing

biogas reactor. The reactor does not take

up much space, as it is encased in a blue

a fence.

container in a small space, surrounded by

sk is far from optimal. Persistent organic

environmental toxins, paints, electronic

scrap, medical waste, entrails from slaugh-

terhouses, furniture, and waste from the

all in one foul cocktail. A steady stream

brick building, we can see frantic efforts

construction industry are all collected in

the same space at the same landfill site –

in and out of this large expanse. Around

tapes, computers, keyboards and collapsed

sofas simply lie in the corner of the site,

of lorries and waste disposal trucks drive

300 such trucks visit here every day. Video-

next to rusty paint tins and pierced aero-

"This is a

heat exchanger, and over there

you can see the equipment where we dewa-

erator. If there is an oversupply of meth-

Jesper as he shows us round.

ter the methane before it flows to the gen-

ane, we can flare off the excess," explains

A tonne of

glass will get a million roubles

from the local companies, equivalent to

at the conveyor belt and sort the rubbish

around USD 65. Sergey's tiny company on-

ly employs 13 people, most of whom stand

by hand. In one day, they can successfully

sort, bale and deliver around 10 tonnes of

ital to expand its operations. Sergey tells us

rubbish for recycling. Their sorting is on-

ly small-scale, and the company lacks cap-

about his time spent in Germany, gesticu-

lating wildly, and explains his plans to im-

cycling operations.

port German technology to upgrade his re-

Vireo Energy has

successfully established

pansion and internationalisation of the

company started up an equivalent project

a presence on the Belarus market. An ex-

business is already underway. Last year, the

in Gatchina, Russia. "We intend to be the

leading producer of renewable energy in

Domaradzki.

eastern and central Europe," says Robert

Around 300

trucks visit the

waste disposal site in

Vitebsk every day.

→vireo's

biogas

re-

actor is estimated

to produce around

6,000 megawatt

hours of electricity

per year.

sols. The Western culture of disposability

A stone's throw from the site is a small gur-

flow to the Baltic Sea.

has also found a foothold here in Belarus.

gling brook; perhaps part of the catchment

rubbish – it would also benefit our business.

"It's essential for people to start sorting

If there is too much rubbish and industri-

so we cannot produce electricity from that,"

says Jesper.

al waste amongst the organic waste, then

the levels of methane are insufficient and

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vitebsk

A brick in

the wall

German heavy metal music booms from the car's

speakers as we approach Vitebsk, north-eastern

Belarus. The beautiful natural landscape flickers

past the windows whilst the singer's hoarse

roaring voice hurls us back to the urban reality.

We have been picked up in the car by consultant

Mikhail Vasilevich in Minsk and are on the way to

the OJSC Keramika factory in Vitebsk to take a

look at the local reality of what happens on the

factory floor.

Photos

Patrik rastenberger

ENERgY EFFiCiENCY

OJSC Keramika manufactures

bricks and

drainage pipes for the construction industry

in Belarus and Russia. A few years ago, the

company sold almost 70% of its products to

● On the factory floor.

Keramika produces bricks,

blocks and drainage pipes

from burnt clay.

messed up businesses to the east. Today, ex-

ports to Russia only account for 25-30% of the

to always be one step ahead and make contin-

uous risk assessments. Currently, it is bricks

ing like hot cakes. There is also need for con-

struction materials for a wide range of new

for houses or large ceramic walls that are sell-

buildings going up in the large cities, where

high-rises are taking shape thanks to the

governmental stimulus policies and finan-

cial backing from the Belarus government.

Russian customers. Now the financial crisis

and the Russian ruble's drop in value have

company's turnover, which has forced Ker-

sensitive to economic fluctuations. You have

amika to find new sales markets for their

products. Construction is an industry that is

12 JUNE 2015 nefco newsletter

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vitebsk

Last year, Keramika

made an average of

for Keramika's products is particularly

knots, both in respect of dacha second hol-

iday homes and construction in the cities.

However, competition is tough, and it is es-

around 450,000 bricks per day. Demand

constant in summertime, as people ren-

ovate and build new properties at a rate of

NEFCO's Facility for Cleaner Production.

This investment has enabled a modernisa-

plant and two hot water boilers, generat-

ing cash in the kitty.

procurement of expensive grid electricity

by around 7,538 thousand kilowatt-hours

"The investment has helped us to avoid

tion of the ventilation system and the in-

stallation of a new gas-fired cogeneration

sential to get the right price point on prod-

ucts. Keramika is fighting for its place in

Belarus market.

the sun with six other competitors on the

by 26%, which has a knock-on increase for

mika's CEO Pyotr Prizhitomsky.

"Local fuel prices have recently gone up

per year. Keramika's electricity consump-

tion," says a contented Chief Energy Spe-

cialist Nikolai Bizunkov.

tion is now fully covered by our own produc-

“We aim at invest-

ing around EUR

25 million in the

modernisation of

our production

lines by 2017.”

Pyotr Prizhitomsky

CEO of Keramika

our production costs, making our compet-

itiveness harder to maintain," says Kera-

The savings free

up capital, which in its

turn is used to repay the load. According

to the preliminary calculations that have

to NEFCO within four years. We are on a

been made, the loan will be repaid in full

walkabout through Keramika's factory ar-

a Viessman boiler.

eas to take a look at the new boiler. Kera-

Electricity and heating

costs have previ-

ously comprised around 32% of the compa-

and mess up company management. This

is why Keramika has decided to improve

ny's costs, but now these prices are expect-

ed to sky-rocket, impacting on profitability

its electricity production using a loan from

mika is relying on German technology with

stalling a boiler that could burn biomass,

"At one stage we were considering in-

tain chips or pellets, so instead we in-

Keramika's

elec-

tricity consumption

is fully covered by it's

own production.

←←

Presence.

The

company has 1,110

employees.

←

Keramika

makes

an average of around

450,000 bricks per

day.

but we realised it would be difficult to ob-

stalled a boiler that uses gas. Our heat-

ing plant is entirely automated. We pro-

duce both electricity and heating for do-

mestic use, which is an efficient way of

providing the buildings with energy," says

Nikolai Bizunkov.

"The investment has

helped us to avoid pro-

curement of expensive

grid electricity by around

7,538 thousand kilowatt-

hours per year."

ate a magical illumination, as we track the

back-breaking work on the conveyor belt.

It is rarely

worthwhile to rest on your

mer, Keramika is already planning to open

laurels in the business world. This sum-

a new shop in order to reach even more cus-

tomers. Company management intends to

comprehensive production of porcelain-

tomated.

coated bricks. The furnaces will be mod-

modernise the production lines to begin

ernised and the production lines will be au-

The avoidance of

expensive grid elec-

tricity also provides environmental bene-

fits in the form of reduced emissions of car-

bon dioxide, sulphur dioxide, nitrogen ox-

ic compounds. The courtyard area outside

the plant is cluttered with multiple neat

piles of bricks, as far as the eye can see. In

one of the factory buildings, bricks are sort-

ed and loaded onto wooden pallets, await-

ing pick-up by a forklift truck. The sunlight

streams through the dusty windows to cre-

ides, carbon monoxide and volatile organ-

project by the end of 2017. The investment

veals Keramika's CEO Pyotr Prizhitomsky.

"We estimate that we can implement the

costs look to be around EUR 25 million," re-

14 JUNE 2015 nefco newsletter

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Minsk

BNB-Bank sets

the wheels in

motion

The Belarusky Narodny Bank (BNB-Bank) head offices in

Minsk have had a fresh facelift. The newly-renovated

building is wedged between grey high-rise blocks around a

neat courtyard, a stone's throw from Kalinin square next to

one of the city's main streets.

Photos

Patrik rastenberger

16 JUNE 2015 nefco newsletter

he bank is harsh

on the eye

with its garish orange colour

tions and fluttering flags at the

entrance have a splash of or-

ange. To be seen is to be heard.

theme. All its signs, publica-

fication organisation," says the bank CEO

Constantine Tseretel, proudly.

than 400 employees throughout Belarus.

The main clientele are small and medium-

uals. The bank's financial backbone is sup-

Georgia and the International Finance Cor-

poration (IFC), which together own 99.98%

ry of Georgia, where the bank's total assets

amount to an impressive USD 3.4 billion.

size businesses plus well-off private individ-

ported by the influential financiers Bank of

of the shares in BNB-Bank. Bank of Geor-

The CEO meets

us wearing a dark, well-tai-

lored suit without a tie, and comes across

And judging by BNB-Bank's reputation, the

bank is relatively well-known in the capi-

er small scale.

"In 2013 we were ranked as Belarus' most

tal city, despite its business being still rath-

dynamic bank, by an independent classi-

as informal as he shows us the details of

the bank's key figures. Last year's loans

amounted to a total of USD 146 million,

in the country's banking sector in terms of

the lending volumes. BNB-Bank current-

ly has over twelve branches, and has more

which places BNB-Bank in thirteenth place

gia is itself a key player in its own territo-

nefco newsletter JUNE 2015 17

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Minsk

“The joint fund lends

capital to companies

interested in modern-

ising their machinery

and purchasing new

fuel-efficient lorries.”

joint fund to promote green, environmen-

million to the joint fund, which lends capi-

In 2013, NEFCO

and BNB-Bank founded a

tally-friendly investments in the transport

sector. NEFCO granted a loan of EUR 1.5

tal to companies interested in modernising

their machinery and equipment, and pur-

chasing new fuel-efficient lorries. Belarus

the transport sector and goods traffic have

significant standing in the country.

is a transit country for international freight

of goods and foodstuffs, which means that

"Up to now, we have granted 16 loans

in December 2014 and January 2015, which

indicates that we clearly did something

right," says Tsereteli with a wide grin.

"Our net income reached record levels

Our interview in

the bank's meeting

room is coming to an end, and it will soon

be time to research fuel-efficient lorries.

Leading Specialist Katsiaryna Stain takes

us to the outskirts of the city to meet with

Constantine Tsereteli, speaks fluent Eng-

the bank's clients. Stain is responsible for

the bank's international relations, and, like

lish. The car journey takes us through bus-

tling busy streets and ring roads, to a pet-

rol station where OOO Progsib's CEO Alek-

He poses willingly in the lorry's cab and

Progsib has specialised in the transport of

dairy products from Belarus to the Russian

market. Progsib's lorries are loaded with

cheese, milk and cream cheese products,

is in order.

so it must be ensured that the cold chain

sandr Aleksievich meets us for a quick chat.

looks confidently into the camera. OOO

for these kinds of projects, but we hope

to be able to sign more similar loans this

year. The macro-economic crisis last year

did have a negative effect on the influx of

project queries and loan applications, in-

Tsereteli.

cluding for this type of investment," says

However, thanks to

rigorous risk man-

agement and long-term planning, BNB-

Bank successfully managed to ride out the

tune of USD 18 million from the syndicated

bility.

worst of the storms during the financial

crisis. A replenishment of financing to the

loan facilities arranged by EBRD and IFC al-

so contributed to the bank's economic sta-

"we have

successful-

ly squeezed our annual fuel

consumption down by 15%,"

says CEO Aleksandr Alek-

sievich from OOO Progsib.

Belarus and one in Russia. The financial

duced demand of the products we trans-

come," Aleksievich explains.

port, which has also impacted on our in-

"We collaborate with two dairies in

year, or as long as the capital flow permits.

by the company.

downturn in Russia has unfortunately re-

It costs specifically around EUR 86,000 to

"Our lorries use an average of 28-32 li-

for example in Ukraine where NEFCO has

Bank Lviv to promote investments in en-

good experiences with BNB-Bank's loans in

for Georgia.

purchase a new lorry of the same size used

tres of fuel per 100 kilometres. Thanks to

our move to more modern and fuel-efficient

Aleksievich concludes.

vehicles, we have successfully squeezed our

annual consumption down by around 15%,"

created joint funds with Megabank and

ergy efficiency. As a best case scenario, the

Belarus will also set the wheels in motion

of Georgia on the opportunity to create an

equivalent fund which could lend capital

"We are currently discussing with Bank

←←"Our

net

income

reached record levels in Jan-

uary 2015", says CEO Con-

stantine Tsereteli at BNB-

Bank.

←To

be seen

is to be heard.

The BNB-Bank bank is harsh

on the eye with its garish

orange colour theme.

necessary to review the company's fixed

costs, and reduced fuel costs can be one

way of improving profitability. OOO Prog-

sib has replaced two of its fourteen lorries

thanks to a loan from BNB-Bank. A more

comprehensive upgrade of the company's

estimates replacing one or two lorries each

vehicles is expected in future. The company

"Under the circumstances, it is therefore

NEFCO's collaboration with

BNB-Bank

is just one link in the systematic work to in-

crease contact networks and loans to com-

mercial banks. There are similar set-ups,

to Georgian environmental investments,

including the transport sector," explains

NEFCO's Senior Financial Manager Thor

Thorsteinsson.

18 JUNE 2015 nefco newsletter

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Climate finance

adapting to climate change in developing

gUEST COMMENTARY

Nordic funding aimed

at mitigating or

countries needs to be upgraded in such a

way that good pilot projects can be upscaled

and replicated. Moreover, additional pri-

vate finance is needed to ensure sufficient

and international policies for replication

and scaling up the solution. Once pilot pro-

jects have proven successful, it is also pos-

sible for stakeholders to look for other types

vestments.

building on existing structures

There exists a

clear demand for 'next step'

funding, following the financing of suc-

cessful pilot projects. A key challenge is to

create bridges between bottom-up, smaller

scale projects on the one hand, and large-

scale international top-down climate fi-

that addressing this need should become

nance programs on the other. We believe

a central theme for Nordic climate finance

Institutions to offer project owners expan-

nine financing, or include projects as part

of national climate funding programs.

institutions. Examples could include part-

Nordic Climate Finance Opportunities

– the NCF Case Study

of funding, including loans and equity in-

funding of climate projects in low-income

Opportunities – The NCF Case Study" that

of Ministers.

countries. These are the main findings of a

new report named "Nordic Climate Finance

has been financed by the Nordic Council

Nordic climate finance and effects in the

developing world

The involvement of

the private sector

also seems to increase the impact and sus-

tainability of the projects. One example is

an investment in Tanzania that taps into

from agricultural waste, decreasing rates

of deforestation by reducing the demand

for traditional charcoal. Another example,

the charcoal market with briquettes made

nering with National Development Finance

sion funding using debt, equity or mezza-

Although Nordic institutions

provide

is still built around thematic silos for de-

velopment funding, export support and cli-

which also includes technology transfer,

the development community (the Danish

and Kenyan Red Cross), the private sector

this case, a new and innovative idea that

a wide range of support for climate pro-

is a project in rural Kenya that involves

(Grundfos AS) and local communities. In

provides clean drinking water to rural com-

software applications. Both projects gener-

in the long run.

munities, combines hardware developed

ate revenue to ensure their sustainability

jects and programs, much of the support

mate/carbon finance supporting specific cli-

ates a barrier for providing a more holistic

Scaling and replicating

successful pro-

facilitates private sector participation and

ultimately provides larger mitigation and

jects also enables new sources of funding,

mate change mitigation activities. This cre-

support scheme. Nordic climate finance is,

would dictate how new approaches in cli-

mate financing emerge in the region.

furthermore, currently not anchored to any

formal Nordic governance structure that

and manufactured in Denmark, with local

adaptation impacts. Scaling smaller pro-

be anchored to local policy demands, which

in turn need to meet the demands of the

easier said than done.

jects to a meaningful size however, needs to

global policy framework to improve access

to climate finance resources – a task that is

Climate finance, however,

offers a

(through NCF) and private sector compa-

theme around which co-operation could

naturally be built; e.g. between NDF

nies, between development programs and

carbon finance specialists, or between clean

technology export networks collaborating

with development funds. There are only a

the established silos between institutions.

few examples of such collaboration across

"NCF is successful in fill-

ing the funding gap that

is a common challenge

for early investments",

says Manager Bayigga

Mukiibi.”

Projects included in

the analysis also

have a strong development agenda with re-

to separate development and climate pro-

grams into silos of their own, but rather try

lated co-benefits, highlighting the need not

to integrate these two financing opportuni-

local Project Manager for a Swedish pro-

ject solution for energy efficient cleaning

fects, such as improved health among fam-

ily members, increased school attendance

by children, as well as increased savings

costs are reported by project beneficiaries.”

per household because of reduced running

expenses for traditional fuels and medical

The importance of

greater private sector

future solutions in climate mitigation and

adaptation must also be acknowledged. All

technology export programs and clean tech-

parties involved, including existing Nordic

nology networks, could benefit greatly from

better access to new and emerging flows of

and development and climate financing.

climate finance. There has been little coor-

Given the natural fit between the promo-

tion of clean technologies and the goals of

portunity in the Nordic countries.

climate financing, this is an under-used op-

dinated overlap between export promotion

involvement in developing and financing

In this regard

NCF is seen as an enabler of

projects, mobilising private sector finance,

reducing the financial risk and helping to

prove the viability of projects. As noted by

Renewable Energy Incubator in Uganda,

Shira Bayigga Mukiibi, Manager of the

“NCF is successful in filling the funding

gap that is a common challenge for early

investments.”

ties in developing countries. Martha Gitau,

of water, notes “important secondary ef-

dennis hamro-drotz, Alleco Oy

Kristian brüning, Climatewedge ltd.

The Nordic Climate Facility (NCF), financed by the Nordic Development

Fund and administered by NEFCO, offer good examples of practical

Nordic climate actions in developing countries. At the same time,

the NCF highlights opportunities for novel approaches to climate

finance and partnerships between Nordic and developing world

stakeholders.

Photo

The facility allows

for testing a pro-

ject concept or technology in a specific ge-

ographical setting, ensuring the accept-

mand for a specific solution. This can be

ance of the solution by the involved stake-

holders, as well as creating an initial de-

linked to higher-level national, regional,

20 JUNE 2015 nefco newsletter

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NEFCO informs

Patrik rastenberger

Retirement

Vice President Torben Vindeløv

retired in March 2015 after having

worked for NEFCO for over 14 years.

Torben has, among other things,

been a member of NEFCO’s

Management Committee and

worked as Country Manager in

charge of NEFCO’s investment

portfolio in Ukraine. We met him

for an interview before he moved

back to Denmark.

Irina Lyashenko

STAFF

This is NEFCO

NEFCO is an international financial

institution established by the five

Nordic countries. NEFCO finances

green growth investments and pro-

jects primarily in Russia, Ukraine and

Belarus as well as climate projects

across the world. NEFCO's main focus

is to generate positive environmental

effects of interest to the Nordic region.

● From left to right:

Alexey Kapustinskiy,

Mykhailo Senchuk and Alexey Doumik at NEFCO's office in Kiev.

iNFORMATiON bUllETiN 1/2015

Editors

Mikael Sjövall, Editor-in-chief

Tita Anttila

Amund Beitnes

Kari Hämekoski

Iryna Lyashenko

Andriy Katashov

Maria Maliniemi

Lia Oker-Blom

Heli Sinkko

Columnist

Marjukka Porvari

layout

LemonWorks

Translations and

proof reading

Käännös-Aazet Oy

Printed by

Oy Lönnberg Ab

Publisher

Nordic Environment Finance

Corporation, NEFCO

Postal address: P.O.Box 241,

FI-00171 Helsinki, Finland

Visiting address: Fabianinkatu -

Fabiansgatan 34

Telephone: +358 (0)10 618 003

Fax: +358 9 630 976

Email: [email protected]

Internet: www.nefco.org

twitter.com/NefcoNordic

Photographs

Patrik Rastenberger, Heli Sinkko,

Dennis Hamro-Drotz, Irina Lyashenko

This Information Bulletin has been

published on FSC-certified paper.

New appointments

at NEFCO

NEFCO has strengthened

its Kiev

office through new recruitments.

Mykhailo Senchuk has been appoint-

ed Assistant as of March 2015. On top

of this, the Kiev office relies on Con-

sultants Alexey Doumik and Alexey

ANNUAl REviEw

STAFF

Kapustinskiy in the technical assess-

ment of various projects to be financed

by NEFCO. In Helsinki, Project Officer

Aliona Fomenco has returned to NEF-

CO’s Carbon Finance and Funds de-

partment after maternity leave.

Healthy environmental results for 2014

NEFCO’s financial

accounts for 2014 show

what added value do you think NEFCO brings?

“The predominant added value – seen from the client’s viewpoint

– is NEFCO’s risk-taking ability, its willingness to provide project

finance and ability to finance smaller projects. From our owners’

point of view, the added value is NEFCO’s ability to improve en-

vironmental conditions in our neighbouring countries in East-

ing the Nordic countries’ environmental policies.”

what will you miss from your career at NEFCO?

“The challenge of working with private entrepreneurs and nudg-

ing projects towards the direction where they perform well to ben-

efit both business and the environment.”

most?

“When I started working at NEFCO in 2001, I had very little hands-

on experience of work in Eastern Europe and Russia, and I had to

learn by doing. My first trip to Murmansk was a challenge, as I

did not know that I had to change airport in St. Petersburg. With-

out being able to communicate in Russian, this airport change be-

up for the return trip in the company of chickens and large shop-

ping bags on an old propeller plane.”

“Moreover, my work of establishing NEFCO in Ukraine, open-

tangible environmental results. The climate

investments last year reduced carbon diox-

ide emissions by some 5.2 million tonnes - a

figure corresponding to the amount of CO2

emitted by 6.58 million persons travelling

from Stockholm to Rome and back by air-

craft. NEFCO’s energy efficiency projects re-

duced electricity consumption by 11,430 gi-

gawatt hours during the period. This corre-

sponds to 67% of the annual electricity con-

sumption in Iceland.

came a bit of a hassle. Having finally arrived in Murmansk, I was

impressed by the hospitality of the people. It was this that made

ern Europe. NEFCO is seen as a good instrument for implement-

ing an office and securing our status agreement has been full of

memorable and good experiences, and I consider the staff in Ki-

ev as part of my family by now.”

despite your retirement, you have decided to work for us as a

Consultant. is it hard to loosen the grip?

“Yes, and I am thankful that I can continue to work on the boards

of the companies I have established during my almost 15 years at

NEFCO.”

when will you chill out and focus on the easy chair back home?

“The easy chair can wait. I have many things to keep me busy. The

motorbike is now registered in Denmark and I am looking forward

to many trips this summer.”

PROJECT APPROvAlS

vidEO PROdUCTiON

Board meeting in

Copenhagen

NEFCO’s Board

of Directors convened in

Copenhagen, Denmark 10 June. The Board

approved a range of indications of inter-

est and one new project in Russia. A semi-

nar on green growth was also arranged in

conjunction with the meeting. The semi-

nar was hosted by the Danish Export As-

sociation and The Trade Council of Den-

mark together with NEFCO.

New video on biogas

production in Belarus

NEFCO has

produced and published a

new video on methane extraction and bi-

ogas production at the waste disposal site

in Vitebsk, Belarus. The project has been

co-financed by NEFCO’s Investment Fund.

The video can be watched at youtube.

com/nefcofinland.

is there any particular event or journey that you remember the

22 JUNE 2015 nefco newsletter

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EFK, Alm.del - 2014-15 (2. samling) - Bilag 9: NEFCO News juni 2015

The Nordic Environment

Finance Corporation

—

[email protected]

www.nefco.org

twitter.com/NefcoNordic

Green

investments

A range of local

enterprises in Vitebsk in

north-east Belarus have joined forces with

NEFCO to invest in energy efficiency and up-

graded production. Energy is currently be-

ing produced at the city's waste disposal site

thanks to efficient extraction of methane.

Waste can generate revenues.

bElARUS

Patrik rastenberger

● The Vitba River

runs through the city

centre of Vitebsk. The city, that was found-

ed in the 10th century, has largely been re-

constructed after the second world war. To-

day, it's the fourth largest city in Belarus.