Climate Investment Fund
Investing in the transition to net zero
By investing in renewable energy, storage and transmission, the Climate Investment Fund aims to maximize avoided emissions in emerging markets with large emissions from coal and other fossil power production.
The Climate Investment Fund is Norway’s key instrument for accelerating the global energy transition. Renewable energy has been a core investment area for Norfund since its inception. In 2022, the government entrusted Norfund with managing the Climate Investment Fund, adding a dedicated climate mandate. While we continue to invest in renewable energy under our development mandate to create jobs and reduce poverty, the climate mandate specifically targets maximizing avoided emissions.
Our ambitions
In out strategy for 2022-2026, our defined ambitions are:
- 9 GW new renewable energy capacity financed
- 14 million tons CO2 avoided per year (equivalent to 30% of Norway’s annual GHG emissions)
Aim
The Climate Investment Fund aims to reduce or avoid greenhouse gas emissions from coal fired power and other fossil energy production. Through investments in renewable energy and enabling technologies, the fund seeks to support economic growth built on low carbon technologies in emerging markets where emissions are large or expected to rise substantially.
As with Norfund’s usual operations, the aim is to help activate investments that would otherwise not be made.
To guide our efforts and clarify how our investments contribute to long-term reduction or avoidance of greenhouse gas emissions, Norfund has developed a Theory of change for investments in this sector, which was updated in 2024. The theory of change outlines the problem we aim to address, the inputs we provide and the steps through which long term impact is achieved.
Fund management
Norfund manages the Climate Investment Fund on behalf of the Ministry of Foreign Affairs. It receives an annual allocation of one billion NOK from the state budget, which Norfund matches with an additional one billion NOK from our own capital. The investments under the Climate Investment Fund are made under Norfund’s own name, but the fund’s investments and portfolio are managed separately from Norfund’s other activities.
Examples of investments
Strategy
The Climate Investment Funds invests in both large-scale renewable energy projects, such as solar and wind farms, and smaller commercial and industrial (C&I) opportunities, such as rooftop solar installations. Additionally, we may invest in enabling technologies with significant climate impact, including storage and transmission. Our focus is on sectors where Norfund has strong expertise, can provide added value, and where viable investment opportunities exist in our target markets.
We primarily invest in equity, with a 20-35% ownership interest, with individual investments of around 25-150 million dollars. The choice of investments will be governed by where Norfund has competence and can make the largest possible difference. We prioritize 8 core countries: South Africa, India, Sri Lanka, Vietnam, the Philippines, Cambodia, Indonesia, and Bangladesh.
The Climate Investment Fund may take a somewhat higher technology commercialization risk than Norfund’s development mandate. In this way, we can help accelerate the implementation of clean energy technologies in our markets through investments that private investors hesitate to take on alone.
