Scaling up the generation of renewable energy in developing countries is essential for both economic growth and development, as well as for mitigating climate change.
2024
actual tCO2e avoided emissions in 2024 from portfolio companies (greenfield)
Since inception
expected tCO2e avoided emissions annually
Climate Investment Fund
Norfund’s investments in renewable energy are playing a pivotal role in bypassing traditional fossil fuel-based development pathways and building more sustainable and resilient energy systems. By replacing current or future electricity that would otherwise be produced from fossil fuels, Norfund’s investments are significantly contributing to the prevention of greenhouse gas emissions.
Norfund estimates avoided emissions from our investments in renewable energy annually based on actual renewable energy production from the investment projects (ex post). For the investments under the Climate Investment Fund, avoided emissions are also estimated up front from expected production (ex-ante).
Actual avoided emissions (ex-post)
Actual avoided emissions are the GHG emissions prevented by replacing grid electricity with power from greenfield renewable energy investments. This is estimated based on data from investees on annual GWh electricity production.
The indicator is used to track the performance of our renewable energy portfolio under both the climate and development mandates. In 2024 alone, Norfund’s portfolio companies generated 10,628 GWh greenfield* renewable energy, resulting in avoided emissions of 9.2 million tCO2e, roughly equivalent to 1/5 of Norway’s total annual CO2 emissions.
Compared to 2023, avoided emissions increased despite similar renewable energy production, because more the production was tilted towards countries with higher fossil fuel dependence and higher grid emission factors.
The main contributors to the avoided emissions in 2024 were wind and solar power investments in South Africa and India, which together make up 76% of total actual avoided emissions.
*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.
Expected avoided emissions (ex-ante)
Expected avoided emissions from investments under the Climate Investment Fund are estimated at the time of investment, projecting the emissions that will be avoided once the planned capacity is installed and operational—often several years later. These numbers are part of the strategic ambitions of the climate mandate. The electricity grid mix of the countries was an important criteria in the country selection in the strategy, where countries with higher grid emission factors were prioritized to maximize climate impact.
From 2023 to 2026, the climate investment mandate aims to achieve 14 million tCO₂e in expected avoided emissions. This target was exceeded already in 2023, reaching 17.6 million tCO₂e by the end of 2024. In 2024 alone investments done under the climate investment mandate are expected to avoid 2.9 million tCO₂e.
Avoided emissions from transmission and storage
Norfund invests in energy infrastructure to overcome barriers to renewable energy in emerging markets. These projects, such as new substations, battery storage and transmission, strengthen energy systems and facilitate renewable expansion. While vital to Norfund’s goals for renewable energy penetration, calculating avoided emissions from these investments is complex and not yet included in impact reports.
Summary avoided emissions
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 estimating avoided emissions ex-post, we use the emission factor for the reporting year (“Operating Margin”), in line with PCAF reporting standard.