Avoided emissions

Climate Mandate

Norfund’s investments in renewable energy contribute to replacing either current or future electricity that otherwise would have been produced from fossil fuels, thereby preventing the emission of greenhouse gases.

8.5 million tons CO2e

expected annual avoided emissions from projects financed in 2023, when they are fully operational.
Corresponding to 17% of Norway’s CO2e emissions in 2022**

2.2 million tons CO2e

avoided emissions in 2023 from operational power plants

** Statistics Norway: Emissions to air – SSB

Results 2023

Expected avoided emissions (ex-ante)

In 2023, Norfund financed five projects under the climate mandate that, when operational, are estimated to avoid 8.5 million tons of CO2e emissions annually (greenfield*). This corresponds to approximately 17% of Norway’s total emissions of CO2e in 2022. Independent Power Producers in India and South Africa are the main contributors to the emission avoidance.

Adding this to the 6.2 million tons of estimated annual avoided CO2e emissions from investments in 2022, Norfund has already surpassed the ambition for the current strategy period 2022-2026 to avoid 14 million tons of CO2e emissions annually.

Separately, Norfund financed a transmission line in India that will enable 2.4 GW of wind and solar power to feed onto the grid, resulting in an estimated 5.8 million tons of CO2e avoided annually.

*Greenfield refers to the capacity Norfund has helped finance the construction of. Hence, it excludes the capacity already installed in the portfolio companies at the time of the investment.

Avoided emissions in 2023 (ex-post)

In 2023, portfolio companies under the climate mandate produced renewable energy corresponding to annual avoided emissions of 5.8 million tons of CO2e. Of this, 2.2 million tons of CO2e were avoided by greenfield projects.

Projects in South Africa and India are the main drivers for the avoided emissions, both because these countries have the largest shares of the portfolio, but also because they have very high grid emission factor (i.e., fossil intensive energy mix).

Additionally, projects in Norfund’s portfolio that are financed under the development mandate generated electricity corresponding to 6.2 million tons of CO2e emissions avoided in 2023. Thus, across both mandates, projects financed by Norfund that are still in the portfolio contributed to an estimated 8.3 million tons CO2e emissions avoided (greenfield).

Read about our avoided emissions under the Development Mandate.

Avoided emissions since Norfund’s inception

All new renewable energy projects Norfund has invested in since the fund was established in 1997, avoid an estimated 13 million tons of CO2e emissions annually (greenfield). This equals approximately 26% of Norway’s annual CO2e emissions a of 2022**.

** Statistics Norway: Emissions to air – SSB

Norfund uses the harmonized IFI approach ‘Methodological Approach for the Common Default Grid Emission Factor Dataset’ (2022) to estimate avoided emissions from our renewable energy investments. The corresponding dataset provides emission factors at country-level, representing the GHG intensity of the electricity grid, thus how much CO2e emission renewable power may avoid in that country.

The estimation includes power producers where Norfund has an ownership share or has extended a loan to, and that are providing electricity to the grid or substituting power from the grid (such as “captive power” solutions that provide power directly to a consumer, for instance rooftop solar). It does not include companies providing pure off-grid solutions such as Solar Home Systems.

The figures are not attributed to Norfund’s share. For exited companies, the calculation of avoided emissions is based on the company’s reported renewable energy generation the last year of reporting before the exit.

For ex-ante avoided emission estimations, we use the emission factor “Combined Margin”***, while for estimating avoided emissions ex-post, we use the emission factor for the reporting year (“Operating Margin”), in line with PCAF reporting standard.

***Combined Margin: combines “Operating Margin” (existing power plants whose operation will be most affected (reduced) by the project), and “Build Margin” (average emission intensities for new electricity generation projected over the next 8 years according to the most recent World Energy Outlook (IEA)).