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					     nORdIC InVEsTMEnT BanK     nOVEMBER 2009

Keep on turning
Modernising Finland’s
hydropower plants

cop 15
putting a price on our future
letter from the president

                                                                                                                                        The situation in the world economy
                                                                                                                                    is adding to the economic concerns. It is
                                                                                                                                    evident that measures in these fields are,
                                                                                                                                    despite all the lip service, high on the
                                                                                                                                    cost-cutting lists, and it is estimated that
                                                                                                                                    investments in renewable energy will fall
                                                                                                                                    by two-thirds in 2008-2009.
                                                                                                                                        The fact that it is thought to be too
                                                                                                                                    expensive to invest in measures mitigating
                                                                                                                                    climate change and at the same time also
                                                                                                                                    too expensive NOT to invest, as claimed
                                                                                                                                    in the Stern Review on the Economics of
                                                                                                                                    Climate Change, shows that there is some-
                                                                                                                                    thing fundamentally wrong in the relative
                                                                                                                                    prices of emissions.They do not reflect
                                                                                                                                    the externalities related to climate change,
                                                                                                                                    and we should not expect them to do so
                                                                                                                                    without resolute policy measures.
                                                                                                                                        It is only when carbon emissions are
                                                                                                                                    properly priced that we can see the
                                                                                                                                    trade-off between the long and the short
                                                                                                                                    term. Needless to say, if no price is
                                                                                                                                    placed on emissions, or the price is too
                                                                                                                                    low, outlays targeted to reduce emissions
                                                                                                                                    will appear as costs and not as invest-
                                                                                                                                    ments. This is also true for the situation
                                                                                                                                    in emerging economies, where it seems
                                                                                                                                    on the basis of current relative prices
                                                                                                                                    unfeasible to invest in best available, but
                                                                                                                                    undoubtedly rather expensive, tech-
    Photo: Johannes Jansson/noRDen

                                                                                                                                        Many countries try to get around
                                                                                                                                    this by applying different kinds of sup-
                                                                                                                                    port schemes. This is, however, neither
                                                                                                                                    an effective nor a lasting solution. These
                                                                                                                                    schemes are typically temporary in na-
                                                                                                                                    ture and they lack transparency. Hence,
                                                                                                                                    they do not provide a proper guide to
                                                                                                                                    R&D. Also, they rest on the assumption
                                                                                                                                    that the providers of support have a
                                                                                                                                    crystal ball and can judge which solu-
                                                                                                                                    tions should be supported, despite the
                                                                                                                                    fact that many solutions are just evolving

                                         Find a way to
                                                                                                                                    and others not yet known. Moreover,
                                                                                                                                    the subsidies are not free, and the cost
                                                                                                                                    burden is distributed in the economy
                                                                                                                                    in a highly opaque way.

                                         price emissions                                                                                Hence, we need to be able to pro-
                                                                                                                                    vide the markets with a price on carbon
                                                                                                                                    emissions, which in a relatively short
                                                                                                                                    period of time reflects the true external
                                                                                                                                    costs of emissions. This is a global task
                                         The UN Climate Change Conference            lective effort is emerging to avoid the        and thus the biggest challenge facing
                                         in Copenhagen is rapidly approaching,       necessary adjustment costs, and in many        the Copenhagen conference.
                                         and different kinds of tensions are grow-   quarters decision-makers are demanding
                                         ing. It seems that we all agree on the      external financial support as a prerequi-      October 2009
                                         target, but we do not agree on how to       site for participation in activities dealing   Johnny Åkerholm, President and CEO
                                         get there. Even more importantly, a col-    with climate change.

                                     2   BULLETIN NovEmBEr 09
                                                                                                                   letter from the president
     BuLLetin noveMBer 2009
     4     Where the water flows
           hydropower generated from the rivers of lapland is crucial in
           Finland’s expansion of renewable energy production

     8     putting a price on our future
           climate economist Klas eklund calls for a uniform price on emissions

     10 Fund ensures post-2012 carbon trading
        credit trading will continue after the expiration of the Kyoto Protocol
     12 Fuel for debate
        Delegates at coP 15 will be driven by cars tanked on waste-based biofuel
     14 region gets a strategy
        the baltic sea region needs integration and a strategy
     16 neva programme will withstand no delays
        sewage tunnel to reduce direct discharges into the neva
     18 trendy travelling by tram
        the city of helsinki invests in rail services
     20 From waste to wealth
        a new waste-to-energy plant is being built in eastern norway

                                                                                                                            Photo: Pamela schönbeRg/nIb
     21 integrated environmental procedures reduce financial risks
        Interview with hilde Kjelsberg, vice President and head of the
        credit and analysis Department at nIb

     22 shrinking eco-footprints
        Recycling centre and biopower plant to reduce carbon dioxide emissions
     24 new sewage pipe eases daily life
     25 niB in brief

BuLLetin                                printed by                       cover pHoto
nIb bulletin is published in english.   erweko Painotuote oy, helsinki   Installation of new turbine in
                                                                         Pirttikoski hydropower plant.
teaM                                    puBLisHer                        Pamela schönberg/nIb
Director of communications              noRDIc Investment banK
Jukka ahonen, nina monsen (editor)      Fabianinkatu 34                  neW suBscriptions
Dimitrijs alehins, Kyra Koponen,        P.o. box 249                     telephone +358 10 618 001
linda lindfors, Joan löfgren,           FI-00171 helsinki, Finland       or
nina näsman, Pamela schönberg           telephone +358 10 618 001
                                        Fax +358 10 618 0725             cHange oF address
Layout                                  Internet             Fax +358 10 618 0723
mccann helsinki                         e-mail

                                                                                            BULLETIN NovEmBEr 09   3
renewable energy

                                        Where the water flows
                                         Hydropower generated from the rivers of Lapland is crucial in
                                         Finland’s strategy to expand its production of renewable energy.

                                                                                                                                                                 Photo: Pamela schönbeRg/nIb
                       The sun is shining in a perfectly blue sky     tion work almost drowns out the voice         we will have started a new cycle for
                       over the serene river and lake landscape       of our guide, Kemijoki Director Kari          our plants,” says Mr Jokinen.
                       of Finnish Lapland. It is a late September     Jokinen. He tells us that the fifty-year-         The new generators will increase the
                       day, and the surrounding countryside is        old turbines in the plant are swallowing      plant’s output of renewable and emission-
                       showing its finest autumn colours to the       their last gallons of water this year. They   free energy by 20-40%. The increase in
                       visiting NIB crew. We are standing on          are now being replaced by modern,             output will be enough to recoup the
                       the bank of the longest river in Finland,      state-of-the-art equipment. One of the        investment.
                       the Kemijoki, admiring the beautiful           two turbines in the plant is already being
                       mountains reflected in the calm waters.        replaced, and the other one still in use      More green energy needed
                           But the peace and quiet exists only        will be replaced next summer.                 In 2008, the Finnish government
                       on the surface. Underground, directly              The installation of the new turbines      submitted its new national energy and
                       below us, a giant water turbine is run-        is part of a renovation programme that        climate strategy to parliament. The strat-
                       ning at full capacity. We are about to visit   Kemijoki started already in 1996. All         egy is Finland’s answer to the European
                       Finland’s largest tunnel hydropower            of the company’s hydropower plants are        climate action and renewable energy
                       plant, Pirttikoski, run by the Finnish         being renovated and the machinery             package, in which the EU has commit-
                       hydropower company Kemijoki.                   replaced. Pirttikoski and its neighbour-      ted itself to reduce greenhouse gas emis-
                                                                      ing plant Vanttauskoski are the last two      sions by 20% by 2020.
                                                                      under construction.                               The country-specific target for Fin-
                       Massive construction                               “The life cycle of a hydropower           land is for renewable energy production
                       Inside the plant, 60 metres down by            plant is about 40 to 50 years and when        to cover 38% of the end use of energy
                       elevator, the sound of heavy construc-         this renovation project is completed,         within the same time limit. This will put

                   4   BULLETIN NovEmBEr 09
                                                                                                                                                                                renewable energy
                                                                                                                                              Photo: Pamela schönbeRg/nIb
the first new turbine is now being installed in the Pirttikoski plant.

pressure on green energy producers such            The Finnish state is the major stakehold-   Mr Takala points out that there are
as Kemijoki. In 2008, renewable energy             er with half of the company’s total share   several positive environmental effects
accounted for about 27% of the total               capital, while private owners account for   of the project:
end use.                                           the other half.                                 “The new turbines will not need any
    “Finland’s role in the strategy is ex-                                                     hydraulic fluids for lubrication, only air
tremely challenging,” says Aimo Takala,            green eFFects                               and water. This will eliminate the risk of
CEO of Kemijoki.                                   The variable and unstable nature of         oil leakage into the environment.”
    “Finland will need to turn over every          wind power makes hydropower a requi-
stone there is to reach this goal, and             site complement as a power source.          a perFect MatcH
Kemijoki is contributing by adding                 Wind and other weather conditions           NIB has participated in the financing
more hydropower capacity. But hydro-               cannot be regulated; when the wind is       of the renovation programme with a
power alone will not be sufficient to              not blowing, there is no output from the    loan of EUR 25 million to Kemijoki.
meet the new requirements for renewa-              wind power plants.                          Sebastian Påwals, Senior Manager at
ble energy production. Finland will also               “Hydropower production, on the          NIB, says that the environmental effects
have to develop substantial production             other hand, is superior in balancing        of the project are important for the
capacity in wind power and biofuels.”              power output, since water can be stored     Bank:
    Kemijoki is Finland’s largest produc-          in dams and used when needed. The               “Clearly, there are substantial
er of hydroelectric power. The company             output from the turbines can be changed     reductions of greenhouse gas emissions
owns twenty hydropower plants con-                 within seconds, compared to other pow-      to be gained from investments like this,
nected to three river systems in Finland.          er plants that need hours to increase or    since any increase in renewable energy
Sixteen power plants and eight dams are            decrease the produced power,” explains      production crowds out fossil fuel
operated along the river Kemijoki,                 Mr Takala.                                  production.”
which has given its name to the compa-                 The replacement of the turbines in          But he also points out that the Kemijoki
ny. The aim of the Kemijoki company is             the Kemijoki plants will result in a con-   loan in fact fares well vis à vis both of
not to maximise its profits, but to supply         siderable increase in the output of such    the Bank’s operational mandates—to
hydropower to its owners at cost price.            flexible, green energy in Finland. But

                                                                                                               BULLETIN NovEmBEr 09                                         5
renewable energy
  30th anniversary

                                                                                                                                                                                              Photo: KemIJoKI oy
                         enhance the environment and competi-          projects, for example from an environ-

                                                                                                                                                                Photo: Pamela schönbeRg/nIb
                         tiveness.                                     mental point of view. It gives us a cer-
                              “The operational idea of Kemijoki,       tain merit—apart from the direct fi-
                         to supply its owners with hydropower at       nancial side of the cooperation,” he
                         cost price, increases the competitiveness     comments.
                         of the owner companies. And the new               And according to Mr Påwals, more
                         technology in the plants will make pro-       NIB-financed investments in green
                         duction even more cost-efficient. So          energy production can be expected in
                         mandate-wise, this is a very strong           the future.
                         project for NIB, and we are happy to              “The European climate action sets
                         participate.”                                 new standards for emission-free energy
                              Mr Takala agrees that the coopera-       production, and NIB is pleased to assist
                         tion has been rewarding. He points out        in financing relevant investments.
                         that NIB’s involvement provided the           Projects like this are really almost
                         project with added value:                     tailor-made for us,” he concludes.         Kemijoki ceo aimo takala says that the
                              “For us as a company it is important                                                renovation project will result in increased
                         to have international financial institu-                                                 power output and environmental benefits.
                         tions like NIB as partners. It gives credi-
                         bility to the project. And it is also of
                         great value to us that NIB assesses the

                     6   BULLETIN NovEmBEr 09
                                                                                                                                                                                 renewable energy
                                                                                                                                               Photo: Pamela schönbeRg/nIb
 Photo: KemIJoKI oy

pirttiKosKi—a piece oF FinnisH industriaL History

The Pirttikoski plant was built between       in the tunnel was carried out by 2,000
1956 and 1959. The plant’s turbines were      men labouring around the clock. A whole
placed 60 metres underground, in order for    community of workers with their families,
the water to fall from a sufficient height.   a total of about 4,000 people, was esta-           the construction work is well under way, 60
                                                                                                 metres underground, in the Pirttikoski plant.
The water was then channelled through a       blished around the plant construction site
2.5–kilometre–long tunnel before being        in Pirttikoski.
rejoined with the Kemijoki river.
                                              Today, the residential area in the Pirttikoski
The building of the plant was a project of    village is mostly deserted, as most of the
enormous proportions for Finland in those     maintenance work of the plant is done
days. The heavy drilling and blasting work    remotely from the city of Rovaniemi.

                                                                                                                                            IllUstRatIon: KemIJoKI oy

the turbines in the Pirttikoski plant are placed 60 metres underground and the water is channelled through a 2.5-kilometre-long tunnel.

                                                                                                                  BULLETIN NovEmBEr 09                                       7
                             putting a price
Climate Change

                                                                           Mr Eklund’s appeal to the world’s deci-
                                                                           sion-makers due to gather at the UN
                                                                           Climate Change Conference in Copen-

                             on our future
                                                                           hagen (COP 15) in December 2009 is
                                                                           clear: “We need to get a global deal
                                                                           against climate change as soon as possi-
                                                                           ble or the consequences will be fatal.”
                                                                               Uncertainty and long time horizons,
                                                                           Mr Eklund continues, delay responses to
                                                                           the climate crisis. “The financial crisis
                                                                           has been acute and people have seen the
                                                                           collapse happening. The bankruptcy of
                                                                           the global climate, on the other hand, is
                                                                           a slower process. So some people still
                                                                           find solace by hoping in future solutions.
                                                                           And too many politicians do not nor-
                                                                           mally care about what will happen long
                                                                           beyond their terms,” he says.
                                                                               Mr Eklund hopes putting a price on
                                                                           carbon emissions will be at the top of
                                                                           the delegates’ agenda at COP 15.
                                                                               “Instead of having one carbon tax
                                                                           system in China, another in the US and
                                                                           yet another in the EU, we should ideally
                                                                           have one system regulated by a global
                                                                           authority,” he explains.
                                                                               However, the starting point for COP
                                                                           15 is challenging and Mr Eklund does
                                                                           not expect the meeting to actually reach
                                                                           such a conclusion. There is still no pre-
                                                                           liminary agreement on how much we
                                                                           should reduce emissions.
                                                                               “The EU has promised to decrease its
                                                                           emissions by 20%, based on 1990 levels,
                                                                           by 2020, while the US has promised
                                                                           nothing more than a net zero per cent
                                                                           decrease. China, however, is demanding
                                                                           that the rich countries decrease emissions
                                                                           by 40% before they expect China and
                                                                           other poorer nations to follow,” Mr Ek-
                                                                           lund says, highlighting the gap of 40 per-
                                                                           centage points between the two biggest
                                                                           polluters in the world.
                                                                               The economist raises two key pre-
                                                                           requisites that should form the basis of a
                                                                           successful climate conference: worldwide
                             the most important weapons in the fight       scope and carbon pricing. Emissions
                             against the climate crisis are economic,      should ideally have the same price every-
                                                                           where to avoid carbon leakage from rich
                             says Klas eklund, sweden’s well-known         nations’ moving their “dirty industries” to
                             climate economist, in an interview with the   poorer nations with lower carbon taxes.
                             niB Bulletin. He calls for a uniform price        COP 15 would need to look at cli-
                             on carbon emissions worldwide and better      mate aid and global finance deals, as a
                             skilled finance personnel to help build       standardised price for carbon emissions
                             a greener economy.                            would be unfair to the poor countries.
                                                                           Either way, COP 15 must be both deep-
                                                                           er and broader than the Kyoto Protocol,
                                                                           the previous effort to reach a worldwide
                                                                           agreement against global warming.

                 8   BULLETIN NovEmBEr 09
                                                                                                                                                                     Climate Change
HopenHagen                                         opportunity for economists to regain
Copenhagen, upcoming host to the world’s           some of the status they have lost due to
biggest climate conference, has nicknamed          the financial crisis.
itself Hopenhagen and proudly declares                  “The International Energy Associa-
itself “the most important city in the world       tion has estimated that some USD 50
in 2009” in connection to the event. Mr            trillion needs to be invested to make the
Eklund is concerned about the concrete             energy sector less dependent on fossil
outcome of the meeting.                            fuels during the next few decades.
     “We have to keep hopes high, but I am         Financial institutions like the Nordic
afraid we will merely get a skeleton deal in       Investment Bank will face the huge task
Copenhagen,” he remarks.                           of channelling the investments. In addi-
     Mr Eklund recently met with Chinese           tion, savings and bond trading are areas
officials and economists at a top-level            where both commercial banks and inter-

                                                                                                                                  Photos: PeR-anDeRs JöRgensen
climate seminar in Beijing and is optimistic       national financial institutions will be
about China’s efforts in the long run. “I see      important players,” he explains.
a new awareness of the threats of climate               The economist continues on the
change, and also a new willingness to push         challenges in his profession: “Once there
for a transition to a low-carbon society. No       are political decisions on carbon taxes or
doubt the next five-year plan will include         cap-and-trade systems, we can start
ambitious targets for a greener China,” he says.   calculating the return on green tech
     Mr Eklund’s colleague, Sir Nicholas           projects and let our analyses affect stock
Stern, author of the Stern Review on the           markets and credits. Then economists
Economics of Climate Change—who also               and financial analysts should make sure
participated in the recent seminar in China        that the good players are rewarded while
—warned earlier this year that the world           laggards are punished with higher market     Klas EKlund
cannot afford to allow COP 15 to become            rates. The financial sector can then con-
another eternal negotiation system like the        tribute to a greener market economy.”        Prior to his position as senior
World Trade Organization.                               Mr Eklund has recently published        economist at SEB focusing
                                                   a book on climate change, Vårt klimat,       on the global economy and
econoMic tooLs                                     (Our climate) outlining possible ways to     climate, Eklund worked as
Carbon pricing is linked to other eco-             alleviate global warming. In the book,       chief economist in the same
nomic tools against climate change. The            Mr Eklund discusses another economic         financial institution between
more expensive it is to base production            means of handling emissions, the Clean       1994 and 2007. He started
on fossil fuels, the stronger the incentive        Development Mechanism (CDM). This            his career as a teacher and
could be to invest in green technology.            is an arrangement under the Kyoto            researcher in macro economy
    “I am an economist, so I focus on price        Protocol which allows net global green-      at the Stockholm School of
mechanisms; but putting a price on carbon          house gas emissions to be reduced at         Economics in 1975. He was
should be done in combination with in-             a much lower global cost, as industrial      the economic policy advi-
vestments in R&D,” Mr Eklund argues. He            nations can reach their targets by financ-   ser to the Swedish Minister
cites the current research on Carbon Cap-          ing emission reduction projects in coun-     of Finance, Kjell-Olof Feldt,
ture Systems (CCS) as a good example.              tries where costs are lower. However, in     between 1982 and 1984
    CCS faces scepticism on safety issues          recent years, criticism against the rather   and to Prime Ministers Olof
and for possibly prolonging the life of            cumbersome mechanism has increased.          Palme and Ingvar Carlsson
coal, but Mr Eklund feels there are more                “I believe this is one way the Nordic   between 1984 and 1987. He
arguments on the plus side.                        and Baltic regions could collaborate to      has served on various boards
    “There are poor nations that will still        cut emissions without decreasing indus-      for research institutions on
rely on coal for a long time, and we can-          trial output. However, this system will      the environment and climate
not prohibit any country from using fossil         only work if receiving countries put a       and in the early 1990s chai-
fuels. The two-degree target, the increase         ceiling on emissions,” Mr Eklund says.       red the Swedish Government’s
in global warming that most scientists                  “Growth the way we know it today—       Commission on Productivity.
agree is the maximum our Earth can                 based on fossil fuels—cannot go hand in      He has acted as an adviser to
handle, is much more likely to be met              hand with a greener environment. Global      Sweden’s EU Presidency and
with CCS technology,” he points out.               warming is a sign that economic growth       is currently a member of the
                                                   is not sustainable at the moment. With       European Commission’s Group
eco investMents                                    economic tools like carbon pricing and       of Economic Policy Advisers,
Mr Eklund agrees when Mr Stern calls               the CDM, and by always striving to find      chaired by the Commission’s
the climate crisis the biggest market              new and improved mechanisms, it is pos-      President.
failure of all time, and says that the threat      sible to make growth sustainable,”
of global warming provides a perfect               he concludes.

                                                                                                      BULLETIN NovEmBEr 09                                       9
Climate Change

                    Fund ensures post-2012
                    carbon trading

                 as the expiration of the emission reduction agreement of the Kyoto protocol
                 approaches, interest in the post-2012 credit carbon Fund is clearly increasing.
                 the Fund sends strong signals to companies and investors that credit trading
                 will continue after the Kyoto protocol ends.

                 The commitments under the Kyoto                 the Post-2012 Carbon Credit Fund,          only purchases carbon credits deliver-
                 Protocol, the international agreement on        jointly investing EUR 125 million.         able from the beginning of 2013.
                 decreasing greenhouse gas emissions, will       The aim of the Fund is to ensure that
                 end in 2012. In December this year, the         emission reduction trading will extend     strong signaLs needed
                 UN Conference on Climate Change in              beyond 2012, even if there is no           Christopher Knowles from the Europe-
                 Copenhagen (COP 15) will seek to agree          agreement in place yet.                    an Investment Bank, who also chairs the
                 on the continuance of emission reduction            “For the future it is essential that   Fund’s Supervisory Committee, explains
                 activities beyond the Kyoto Protocol. Be-       the emissions trading continues, and       the Fund’s raison d’être:
                 fore new commitments have been agreed           that we can further engage developing          “The strength of the Carbon Credit
                 on, it is unclear which regulations and rules   countries in this market,” says Harro      Fund is that it is backed up by well-
                 will be applied after 2012.This uncertainty     Pitkänen, Senior Director at NIB.          known financial institutions, which gives
                 is constraining the mobilisation of financ-         The Fund will acquire carbon           the Fund good credibility in the market.
                 ing for projects through emissions trading.     credits from environmentally sustaina-     The Fund can send a strong signal to
                      Together with NIB, the European            ble projects in developing and transi-     companies and investors that credit trading
                 Investment Bank (EIB), Kreditanstalt            tion countries and trade them onward       will continue also after the end of 2012
                 für Wiederaufbau, Instituto de Crédito          to companies within the European           even if a new international agreement
                 Oficial and Caisse des Dèpots have set up       Emissions Trading System. The Fund         has not yet been concluded by then,” he says.

           10    BULLETIN NovEmBEr 09
carBon credits

                                                                                                                                                                                                  Climate Change
Trading emission reductions is one way of ensur-                                 rights to other companies that need them to              cost-effective, reducing the total cost of climate
ing further investments that contribute to redu-                                 meet their own targets. Companies that reduce            change mitigation.
cing greenhouse gas emissions, mainly from                                       their emissions can profit by selling the rights
                                                                                                                                          Companies can also purchase carbon credits
industry. In the European Emissions Trading                                      and companies that need more emission rights
                                                                                                                                          issued by the United Nations to projects located
System, authorities set a cap by issuing a certain                               will have to buy more rights on the market. It is,
                                                                                                                                          in developing and transition countries, i.e.
number of emission rights to companies which,                                    therefore, good business to reduce emissions
                                                                                                                                          outside the European Emissions Trading System.
if their actual emissions are lower, can sell the                                and investments will be made where it is most

                                                     Photo: lInDa lInDFoRs/nIb
increasing interest
Urs Brodmann of First Climate, a
company that focuses on structuring
carbon transactions and which is ad-
vising the Fund Manager, says that all
in all five so-called emission reduction
purchase agreements have been
signed, and another five are imminent.
He gives some examples of projects
that have already signed agreements
with the Carbon Credit Fund.                     markus van der burg, christopher Knowles and Urs brodmann think that some kind of
                                                 consensus will be reached at the climate change conference in copenhagen on how to
    “We have bought carbon credits               continue mitigating climate change.
from various projects involving, for
example, the building of a wind farm
in China, waste management in Ni-
geria and a landfill in Mexico. They
will all help climate change mitigation                                            deaLing WitH cLiMate cHange
by reducing carbon dioxide emissions
                                                                                   Greenhouse gas emissions from industries and             Denmark, are examples of projects that aim to
on a global level. On top of this, they
                                                                                   individual consumption are heating the world and         mitigate climate change. The clean, renewable
will also bring various local benefits,”
                                                                                   changing its climate. By dealing with negative           energy generated by the new parks’ 180 turbi-
Mr Brodmann explains.
                                                                                   environmental impacts today, we are mitigating           nes will be enough to power 400,000 homes.
    Markus van der Burg of Conning
                                                                                   climate change that may threaten our way of life
Asset Management, the Fund Manag-                                                                                                           NIB also financed the upgrade of hydropower
er of the Post-2012 Carbon Credit                                                                                                           plants in Sweden and Finland, which will help
Fund, adds:                                                                        NIB is committed to supporting actions for com-          increase the output of renewable and emission-
    “We can clearly see that the inter-                                            bating and adapting to climate change. The Bank          free energy. The increasing efficiency of existing
est in the Fund is increasing as we are                                            assesses the carbon emissions of all projects it         hydropower plants will help reduce reliance on
getting closer to 2012. The market is                                              finances and identifies their potential for reducing     fossil fuel-based electricity production. In Nor-
becoming increasingly aware that the                                               emissions. NIB welcomes opportunities to finance         way, a high-grade silicon metal factory for the
Fund can provide payment certainty                                                 investments promoting:                                   solar cell industry has been financed with a NIB
to projects such that the value of their                                                                                                    loan. Modern technologies used in the produc-
                                                                                   • renewable energy;
carbon credits will not fall even after                                                                                                     tion process consume significantly less energy
the expiration of the Kyoto protocol,”                                             • energy efficiency;                                     than traditional methods, lowering production
he says.                                                                           • cleaner production technologies reducing
                                                                                                                                            costs as well as air and water emissions.
    The gentlemen are carefully opti-                                              greenhouse gas emissions;                                CLEERE, which stands for Climate Change,
mistic about the results of COP 15.
                                                                                                                                            Energy Efficiency and Renewable Energy, is a
Though the outcome is rather uncer-                                                • the upgrading of power networks and other
                                                                                                                                            NIB lending facility with a framework of EUR 1
tain, they all think that some kind of                                             infrastructure to cope with the effects of climate
                                                                                                                                            billion. Funds for the facility are earmarked
consensus will be reached on how to                                                change, such as extreme weather conditions.
                                                                                                                                            within the Bank’s ongoing lending activities.
continue mitigating climate change                                                 In addition to NIB’s investment in the Post-2012         Since CLEERE was launched in February 2008,
through carbon reduction trading also                                              Carbon Credit Fund, the Bank’s loans to Horns            loans under this facility have been provided for
after 2012. However, negotiating such                                              Rev II, the world’s largest offshore wind turbine        about 25 environmental projects with a total
an agreement is likely to extend be-                                               park being built in the North Sea, and the wind          commitment of over EUR 750 million.
yond the Copenhagen conference.                                                    farm Rødsand II on the island of Lolland in

                                                                                                                                                            BULLETIN NovEmBEr 09                 11
researCh and development

                                                                                                                                                                      Photo: novozymes
                                                                                                                       enzyme production at novozymes’ fermentation

                           Fuel for debate
                                                                                                                       factory in Kalundborg, Denmark.

                           When hundreds of politicians and decision-makers                                            production relying on waste and residues
                           gather in copenhagen in december for the un climate                                         from crops, known as biomass.
                                                                                                                           The NIB financing will be used to
                           change conference, many of their cars will be tanked                                        ensure that the bioethanol campaign
                           on bioethanol. denmark’s enzyme technology company,                                         being carried out during the climate
                           novozymes, has provided the enzymes needed to                                               conference will not just remain a PR
                           produce the waste-based biofuel, hoping it will                                             stunt. The aim of the R&D project is to
                           also provide fuel for the climate debate.                                                   produce enzymes that can convert bio-
                                                                                                                       mass into bioethanol in an affordable
                                                                                                                       manner and to reach a broad market.
                           “People intuitively understand that ener-     cars to run on biofuel made from waste.       Today the production process is very
                           gy based on biomass, wind and solar           It is not just a dream. It will not take 30   expensive.
                           power is good for the environment. The        years to get the technological break-             “The goal of this research is to make
                           challenge is to make people realise that      through, it is happening now,” Ms Jensen      bioethanol production based on biomass
                           these alternatives are economically feasi-    adds enthusiastically.                        a big industry. To make it commercially
                           ble in the very near future,” explains                                                      viable,” Ms Jensen says, adding that the
                           Camilla Kinch Jensen, Head of Investor        Big Business                                  NIB loan will help in the final push
                           Relations at Novozymes, from her office       In June 2009, NIB and Novozymes signed        towards this goal. Novozymes plans to
                           at the headquarters in Copenhagen.            a loan agreement totalling EUR 30 million     have the technology for making bio-
                               “We want the public and the politi-       to finance research and development           ethanol based on biomass commercially
                           cians to understand that it is possible for   (R&D) in enzyme technology for biofuel        relevant by 2010.

                   12      BULLETIN NovEmBEr 09
                                                                                                                                         researCh and development
    Bioethanol based on biomass is a very     modate upcoming needs and reduce the            According to Ms Jensen, the huge
environmentally friendly biofuel. Not         use of oil,” says Ms Jensen.                potential of the future bioeconomy
only are enzymes needed for the conver-                                                   could fall victim to the current econom-
sion of biomass, but with the use of en-      More For Less                               ic crisis, unless governments and finan-
zymes, the conversion process can also        Novozymes invests 14% of its turnover       cial institutions act to support the devel-
become increasingly energy- and re-           into R&D, a high percentage compared        opment of biotechnology solutions more
source-efficient. Biofuel based on waste      to chemical companies and other en-         vigorously, particularly in the fields of
is able to reduce carbon dioxide emis-        zyme producers.                             agriculture and energy.
sions by as much as 90% compared to               “Innovation is the core of our busi-        “In order to address global climate
fossil fuels.                                 ness and is the key to our lead position.   and resource problems, biotechnology in
    “It is important to remember during       Our competitors are both enzyme and         agriculture and industry should be sup-
the current debate surrounding bioethanol,    chemical producers,” she says and cites     ported and not decreased due to eco-
soaring food prices and energy crops,         an example from everyday life: “The         nomic crisis or the belief that the cli-
that in order to reduce the carbon foot-      public can spare the environment and        mate crisis is coming in the remote
print of global transportation we should      save money by washing on lower tem-         future. Governments need to trigger
turn to bioethanol. It is one of the few      peratures. Enzymes work well at lower       research in this field and channel the
alternatives to oil today and will continue   temperatures, unlike most chemicals. To     investment financing through institu-
to be in the coming years. Further into       get the same washing results at lower       tions like NIB,” Jensen concludes, with a
the future, however, the world will need      temperatures, enzymes in the detergents     clear challenge to the delegates attending
a lot of different technologies to accom-     are simply needed.”                         the upcoming climate conference.

on the road to copenhagen: the Danish enzyme technology company, novozymes, has provided enzymes
to produce waste-based biofuel for the cars to be used by the delegates at coP 15.

                                                                                                         BULLETIN NovEmBEr 09           13
baltiC sea

             region gets a strategy
             it takes at least 40 hours to travel 1,000 kilometres from
             Helsinki to Warsaw by train. the Baltic sea is one of the
             most threatened marine ecosystems on the planet. the
             Baltic countries’ power grids are still essentially isolated
             from the rest of the eu. the Baltic sea region needs
             integration, a common approach, a strategy.

             The Baltic Sea region is the focus of the    objectives: to improve the marine envi-      tion of the Baltic Sea is very
             Swedish EU presidency in July–Decem-         ronment, enhance prosperity, make the        strong in Sweden. Together with
             ber 2009. It logically puts the adoption     region more accessible and attractive and    climate issues, this is the highest
             of the European Union’s Baltic Sea           improve safety and security.                 environmental priority for the
             Strategy, proposed by the European               Sweden is favouring the strategy         government.
             Commission, at the top of the current        during its presidency “not only because
             presidency’s agenda.The agreement on the     the Baltic Sea is important for our econ-    WHy is sucH a strategy
             strategy is expected by the end of 2009.     omy and the well-being of our citizens,      needed?
                  The strategy aims at coordinating       but also because the status of the Baltic    As the immediate reason for
             action by the EU and EU member               Sea depends very much on EU policies         developing a regional strategy, its
             countries as well as international organi-   and legislation,” says Anders Alm of the     authors name the “increasingly
             sations and financial institutions to pro-   Swedish Ministry of the Environment.         visible degradation of the Baltic
             mote a more balanced development of              Mr Alm is sure that the political will   Sea itself but also the need to
             the region. The strategy has four main       to address the environmental degrada-        address the disparate development

       14    BULLETIN NovEmBEr 09
                                                                                                                                                                  baltiC sea
Four piLLars For tHe BaLtic sea region
The European Commission adopted a Communication on the EU Strategy for the Baltic Sea Region on 10 June 2009. This is the first time that
a comprehensive strategy, covering several community policies, is targeting a macro-region. As part of the strategy, an indicative action plan has
been proposed that covers the following priorities under each of these four pillars:

   susTaInaBIlITY                         InCREasE PROsPERITY                    MaKE THE REGIOn                         saFETY and sECuRITY
   To reduce nutrient inputs              To remove hindrances to
                                                                                 MORE aCCEssIBlE                         To become a leading
   to the sea to acceptable               the internal market in the             and aTTRaCTIVE                          region in maritime safety
   levels;                                Baltic Sea region;                     To improve the access to,               and security;
   To preserve natural zones              To exploit the full potential          and the efficiency and                  To reinforce protection
   and biodiversity including             of the region in research              security of, the energy                 from major emergencies
   fisheries;                             and innovation;                        markets;                                at sea and on land;
   To reduce the use and                  Implementing the Small                 To improve internal and                 To decrease the volume
   impact of hazardous                    Business Act: To promote               external transport links;               of, and harm done by,
   substances;                            entrepreneurship,                      To maintain and reinforce               cross border crime.
                                          strengthen SMEs and                    the attractiveness of the
   To become a model region
                                          increase the efficient use             Baltic Sea region in parti-          Source: Communication from the
   for clean shipping;                                                                                                Commission to the European Parliament,
                                          of human resources;                    cular through education,             the Council, the European Economic and
   To mitigate and adapt to                                                      tourism and health.                  Social Committee and the Committee of
                                          To reinforce sustainable                                                    the Regions concerning the European
   climate change.                                                                                                    Union Strategy for the Baltic Sea Region
                                          agriculture, forestry and

paths of the countries in the region and               “With political commitment at the              environment are things Sweden will put
the potential benefits of more and better         highest level within the EU we stand a              in the forefront.”
coordination.”                                    great chance of meeting global challenges               In a recent study, the Swedish Envi-
    “Since the enlargement of the Euro-           and opportunities—and being a strong                ronmental Protection Agency established
pean Union in 2004, the challenges the            global competitor. It will be easier to             that out of 24 ecosystem services—or
Baltic Sea region is facing have escalated.       influence EU policies and to ensure that            the natural resources and processes es-
Environmental threats, gaps in economic           they, when needed, are adapted to the               sential for human life—supplied by the
development and insufficient transport            specific circumstances of the Baltic Sea            Baltic Sea, only ten are working at an
infrastructure can only be addressed              region. I am convinced that the strategy            optimal level. Ecosystem services such
through better coordination and joint             is the next step for EU cooperation                 as the provision of food and recreation
action. The EU is well-placed to facili-          around the Baltic Sea, and that it will             are in poor condition. Seven, including
tate these efforts,” says Ann-Kerstin             serve as a model for regional cooperation           the maintenance of biodiversity and the
Myleus, Deputy Head of Unit at the                in Europe,” says Thomas Johansson, Team             capacity of the sea to recover, are highly
European Commission’s Directorate                 Director of the Baltic Sea Unit at the              threatened.
General for Regional Policy (DG Regio).           Swedish international aid agency—Sida.                   “The costs of environmental invest-
    When the proposal for the EU                                                                      ments should be considered in relation
strategy for the Baltic Sea region was            environMent a priority                              to what we would lose if these ecosystem
finally made public, it had been preceded         in crisis?                                          services, for instance, climate regulation
by some 18 months of preparation, led             Mr Alm acknowledges that it is more dif-            or the detoxification of waste, would
and coordinated by DG Regio. Many                 ficult to find financing for environmental          collapse. In this perspective, investing in
parties have been involved in building            investments during a financial crisis.              the environment is good business,”
and debating it since the initiative for              “On the other hand, investing in the            says Mr Alm.
the strategy was taken in 2006. The im-           environment is investing in the future,”
plementation is now also being shared             he says and continues: “The socio-eco-
by many.                                          nomic aspects and values of the marine

                                                                                                                       BULLETIN NovEmBEr 09                      15
baltiC sea

                                                                                                           Photo: neFco
             iMpLeMenting tHe strategy                      tHinK Big, tHinK region
             The strategy proposes an action plan of        The hopes are high that the strategy
             80 flagship projects organised under 15        will pave the way for a better and
             priorities (see the fact box). The action      happier region around the Baltic Sea,
             plan includes such initiatives as the re-      the EU’s Mare Nostrum. Now that
             moval of phosphates in detergent in            eight out of the nine countries around
             order to reduce nutrients released into        the Baltic Sea are EU members, this
             the sea and a plan to connect the Baltic       region is in an unprecedentedly good
             countries to European power networks.          position to develop synergies and
             The Rail Baltica project to build a rail-      best practices in dealing with the
             road connecting Warsaw to Tallinn with         environment.
             a target speed of 120 kph (up from                 “The area could be a model of
             about 25 as of now), a joint maritime          regional cooperation where new ideas
             surveillance system and a fund for inno-       and approaches can be tested and
             vation are other examples of what’s in         developed over time as best practice
             the new strategy’s action plan.                examples,” the strategy states.
                 In 2007–2013, the Baltic Sea region will       The adoption of the strategy thus
             benefit from more than EUR 50 billion of       only marks the beginning.Thomas              despite the financial
             investment support under the EU cohesion       Johansson of Sida hopes that the political   crisis and cutbacks in
             policy and other funding.                      decision-makers in each country
                                                                                                         the municipal and state
                                                            around the Baltic Sea will start think-
             a roLe For iFis?                               ing regionally when planning ahead.          budget financing of the
             The strategy needs the support of              He advocates for more contacts and           neva programme in st.
             international financial institutions (IFIs),   better awareness in the region:              petersburg, the project is
             such as NIB, the European Investment               “Awareness is a prerequisite             moving forward. the city
             Bank and the European Bank for                 for reaching a stage in which we             has pledged to offset the
             Reconstruction and Development.                intuitively see ourselves as a macro-
                                                                                                         budget reduction in the
                 In tune with the objectives now            region. We need to build relations to
             also integrated in the EU strategy, in         solve common problems—problems               coming years.
             early 2008 NIB established the Baltic          that actually can be described as
             Sea Environment (BASE) lending facility        possibilities for development and            The Neva Closure of Discharges of
             with a framework of EUR 500 million            cooperation.”                                Untreated Wastewater Programme, or the
             as a financing source for projects with            Anders Lindholm of DG Regio              Neva Programme, is a large-scale project to
             a positive effect on the Baltic Sea.           also underscores the need for better         build a sewage collection tunnel reducing
             The facility is aimed at assisting in the      awareness of the co-dependency in            direct discharges of wastewater from St.
             implementation of the Baltic Sea Action        the region: “This goes across all the        Petersburg waterworks into the river Neva.
             Plan adopted by the Baltic Marine Envi-        sectors, both for the environment,               The joint financing by NIB, the Euro-
             ronmental Protection Commission—               which is the most obvious, but also          pean Bank for Reconstruction and Devel-
             HELCOM.                                        for prosperity.”                             opment and the European Investment Bank
                 Like the environment, NIB’s other              “We still see that it is hard to         totals EUR 60 million. Loan agreements
             focus sectors—energy, transport and            work together in a coordinated               were signed with the Russian water and
             innovation—are directly linked to the          manner and take full advantage of all        sewage utility Vodokanal of St. Petersburg
             priorities of the EU Baltic Sea strategy.      the opportunities. We will learn how         in May 2009.
                 “Apart from providing financial re-        to make better use of existing resources,        The programme is expected to deliver
             sources, the IFIs are good at going from       institutions, policies and legislation.      98% efficiency in wastewater treatment
             ideas to concrete actions and projects,”       This is what we are trying to achieve        by 2015 by closing off 370 points of direct
             Mr Alm says. For the time being, it looks      with the Baltic Sea strategy,” Anders        discharge. It is already under implementa-
             like there will be a considerable number       Alm of the Swedish Ministry of               tion and Vodokanal has so far carried out
             of project ideas in the national action        the Environment concludes.                   extensive work, such as the completion of
             plans which need to be implemented.                                                         the first tunnel leg, taken into operation in
                 “We really have the momentum to                                                         October 2008.
             save the Baltic Sea. Our knowledge                                                              NIB is the lead bank in structuring
             about the problems is sufficient to act,                                                    the financing for the programme under the
             we know what we need to do and there                                                        umbrella of the Northern Dimension Envi-
             are plenty of financial institutions and                                                    ronmental Partnership (NDEP), which
             donors willing to help. We should really                                                    coordinates the financing of urgent
             take this opportunity to invest in the
             future of the Baltic Sea!” says Mr Alm.

       16    BULLETIN NovEmBEr 09
                                                                                            During and after algae blooming, as a

                                                                                                                                                      baltiC sea
                                                                                            result of direct discharges of wastewater,
                                                                                            the amount of oxygen in the water can drop
                                                                                            below a critical level, which threatens plant
                                                                                            and animal life in the sea.

                                                                                                 “Vodokanal is a leading water utility
                                                                                            company in Russia and has been awarded
                                                                                            for their excellent performance. In this
                                                                                            respect, I have full faith in Vodokanal’s
                                                                                            leadership to meet the objectives set for
                                                                                            the Neva Programme both time-wise
                                                                                            and technically,” he says.
                                                                                                The entire investment programme
                                                                                            has been divided into two parts. Part A
                                                                                            is now fully financed and planned to be
                                                                                            completed by the end of 2012. This part
                                                                                            provides for increasing the wastewater
                                                                                            treatment to 2 million cubic metres a

neva programme                                                                              day in compliance with Helsinki Com-
                                                                                            mission recommendations. Part B is
                                                                                            aimed at achieving a maximum environ-

will withstand
                                                                                            mental effect by closing off an additional
                                                                                            60,000 cubic metres a day of direct un-
                                                                                            treated wastewater discharge into the
                                                                                            river Neva and the Gulf of Finland.

no delays
                                                                                                “This part will be implemented
                                                                                            when the financing is available. We are
                                                                                            currently working on raising financing
                                                                                            for Part B. The city and Vodokanal of St.
                                                                                            Petersburg are determined to implement
environmental investments in North-               Mr Henttonen stresses that Vodokanal      the investment programme to the fullest
west Russia.                                  of St. Petersburg has an impressive track     extent,” says Mr Sergeyev.
    To find out how the project is            record of investments with an international       The full interviews with Alexey Sergeyev
proceeding—amidst the storm in the            financing base and is well acquainted with    and Jaakko Henttonen are available on NIB´s
financial sector and the Russian economy      the necessary procurement requirements        website:
as well as globally—we met with the           as well as project management.
Vice Governor of St. Petersburg, Alexey
Sergeyev, and the Manager of NDEP,
Jaakko Henttonen.
    The Vice Governor acknowledges
that the economic crisis has had an impact
on budgeting for city infrastructure
                                              Photo: st. PeteRsbURg goveRnment

projects. “As a result, the construction of
some parts of the main sewage collector
has slowed down,” Mr Sergeyev says.
However, the sewage collector technology
does not allow for any delays in imple-
mentation. The IFI financing is, there-
fore, essential for keeping the programme
                                                                                                                                       Photo: nDeP

on track.
    “We are optimistic about the future.
I’m sure the cutbacks in the programme
budget for 2009 will be offset by larger
injections in the coming years, so that
                                              alexey sergeyev, vice governor of             Jaakko henttonen, nDeP manager: “I have
the programme will be completed on            st. Petersburg: “the programme will be        full faith in vodokanal’s leadership.”
schedule,” Mr Sergeyev continues.             completed on schedule.”

                                                                                                            BULLETIN NovEmBEr 09                     17

                  Trendy travelling by tram
                  “There has been a dramatic change in the way people perceive public transport
                  in Helsinki. There is also a strong political will to support this development. And in
                  both cases it is especially rail transport that is becoming the trendy way to travel.”

                  These are the words of Matti Lahden-           centre with trams and the metro. Trams              “There are 1.3 million inhabitants in
                  ranta, Managing Director of Helsinki           have been part of the city view for over       the Helsinki metropolitan area and its
                  City Transport. He adds that this is the       a hundred years.                               surrounding municipalities. We have to
                  trend in most other cities in Europe as           “Rail services have a higher status in      focus on the sustainable development of
                  well. One major cause is concern about         people’s minds. Trams are seen as a more       the traffic circulation in general. If every-
                  climate change.                                sophisticated means of public transport        one drives his or her own car, there will
                       Focus is being directed from buses        than buses,” adds Mr Lahdenranta.              not be much traffic, only traffic jams. It
                  towards rail transport for several reasons.                                                   is therefore very important that other
                  Mr Lahdenranta gives a few examples: it        CLOSE COOPERATION                              means of travelling are facilitated in this
                  is more convenient to travel by tram or        For several years, the cities of the Helsin-   area,” he says.
                  metro—the motion is smoother, the ride         ki metropolitan area have been develop-             In 2014 the metro line will be ex-
                  is less bouncy, there is less noise. And       ing public transport in close cooperation      tended by 14 kilometres westwards. The
                  there are no direct emissions into the         and the common efforts are on the rise.        new metro cars will be fully automated.
                  city air.                                      The basic starting point for the develop-      Also the existing cars, as well as the en-
                       A long-term goal of the City of           ment of public transport is rail services:     tire traffic control system, will be up-
                  Helsinki is to replace all buses in the city   trams, metro, and trains.                      graded accordingly. The current control

           18     BULLETIN NOVEMBER 09
                                                                                                                                                                      GREEN TRANSPORT
                                                                                                                                                        PHOTO: HKL
                                                                                                                   LONG-TERM LOAN
                                                                                                                   The City of Helsinki is investing
                                                                                                                   some EUR 143 million in rail
                                                                                                                   services in the coming years.
                                                                                                                   NIB has provided a loan of
                                                                                                                   EUR 50 million to the city for
                                                                                                                   investments in 40 new low-floor
                                                                                                                   trams and 48 new metro cars.
                                                                                                                   The trams will replace old ones
                                                                                                                   from the 1970s. The new metro
                                                                                                                   cars will be taken into service on
                                                                                                                   the expanding metro line. The
                                                                                                                   value-added of NIB’s loan is the
                                                                                                                   very long-term funding, 30 years.

system was taken into use in the early      traffic issues, Mr Lahdenranta has clear
1980s, when the metro was introduced        thoughts on this issue: the more opportu-
to the citizens of Helsinki.                nities you offer, the more people will seize
    Mr Lahdenranta is enthusiastic when     them.
he describes the new metro cars.                In fact, Mr Lahdenranta does not see
“The automation will improve passenger      public transport as opposing other means
safety as the risk of human mistakes will   of traffic.
decrease. The platforms will be closed          By improving public rail transport,
with platform screen doors and the          also cars and buses benefit.
doors will only open when the metro             “They are all part of the entire traffic
stops at the station. The trains will be    system. Even though we are investing in
shorter and the average time between        public transport, a lot of improvements
                                                                                            PHOTO: PAUL WILLIAMS

departures will be decreased, from 4        are also being made in the road network.
minutes to 2.5 minutes,” he says.           The one does not exclude the other. It is
                                            about increasing people’s comfort and
OFFER ALTERNATIVES!                         well-being, protecting the environment
An eternal question in discussions about    and supporting commerce and industry,”
the use of public transport services ver-   he concludes.
sus the private use of cars is whether
improvements in public transport are                                                       Matti Lahdenranta of Helsinki City Transport
really worth the cost. With a background                                                   says we need to focus on the sustainable
education as a traffic engineer, and                                                        development of the traffic system.
working his entire career with public

                                                                                                                             BULLETIN NOVEMBER 09                    19

            waste to
                                                            Photo: oRD&hanDlIng a/s
            the energy company eidsiva
            energi is constructing
            a new waste-to-energy                                                                                       tormod botheim (right), head of
                                                                                                                        renewable energy department,
            plant in eastern norway                                                                                     eidsiva bioenergi as, inspects
            that will produce bioenergy                                                                                 the construction site for the new
                                                                                                                        waste-to-energy plant.
            based on local waste.

            The waste-to-energy plant will be able to       tion of heat for the district heating system.
            produce approximately 200 GWh of ener-                “Bioenergy has a huge growth poten-
            gy, thereby doubling the district heating       tial in Norway and we feel confident that
            network capacity.                               we can make the new waste-to-energy

                                                                                                                                                                Photo: RagnhIlD b. abRante/eIDsIva eneRgI as
                 “We expect to be able to utilise as much   plant profitable,” Mr Dahl says, adding that
            as 70% of the energy in the waste as heating    public support and propitious financing,
            and electricity,” says Tormod Botheim. He is    like the loan from NIB, are playing an
            head of the renewable energy department         important part in reaching this goal.
            at Eidsiva Energi’s own bioenergy company,
            Eidsiva Bioenergi AS. He adds that the          energy FroM Waste
            extension of the regional district heating      “Norway has been spoilt by easy access
            system will enable new users to hook up to      to hydropower and oil. As much as 60%
            the system and gain access to the new           of the electrical power is used for heat-
            cost-effective and environmentally friendly     ing. This is a waste of “noble” energy.
            energy alternative.                             Electrical power is the cleanest form of
                                                            energy and the only form that can be
            Waste oF energy                                 used to run machines, computers and
            “Without the right infrastructure and           other high-tech appliances. Norwegians
            customers, many waste incineration plants       should keep warm by using warm water,           “bioenergy has a huge growth potential in
                                                                                                            norway,” says ola t. Dahl, head of eidsiva
            let the energy generated go straight out        the least noble form of energy, which is        bioenergi’s hedmark region.
            through their chimneys. Proximity to users      easily generated from bioenergy,” Mr
            of energy, like industry, is key in running a   Dahl says.                                      house gas emissions, as it is a carbon-
            waste-to-energy plant,” Ola T. Dahl, Head            “Transmission capacity to other            neutral form of energy,” concludes
            of Eidsiva Bioenergi’s Hedmark region,          countries must increase so that the sur-        Mr Botheim.
            explains. He says that the new plant,           plus of electricity can be exported to
            named Trehorningen, already has a cus-          coal-dependent countries in Europe to
            tomer base for 50 GWh of district heating       reduce greenhouse emissions on the                Loans against
            energy.                                         whole continent,” he adds.                        cLiMate cHange
                 Trehorningen is strategically located in       According to the Norwegian think
                                                                                                              In order to alleviate climate change, it is critical
            the Hamar municipality, where a signifi-        tank Climate Benefit, the export of 30
                                                                                                              to turn energy production away from oil, coal,
            cant part of the households producing the       TWh of wind power and hydropower per
                                                                                                              and gas towards renewable sources of energy
            waste and the consumers of the generated        year could reduce CO2 emissions by up to
                                                                                                              like the sun, wind, water, and biomass. NIB aims
            heat, such as district heating and industry,    30 million tonnes if it replaces coal-fuelled
                                                                                                              to finance projects that contribute to this deve-
            are located. Upon completion by the end         power production in Europe. It equals
                                                                                                              lopment and the EUR 40 million loan agreement
            of 2011, the plant will treat up to 72,000      more than half of all greenhouse gas emis-
                                                                                                              with Eidsiva Energy is one example. The bio-
            tonnes of waste a year.The waste incinera-      sions in Norway.
                                                                                                              energy project is in the A category of NIB’s
            tion plant will have a turbine with the             “The public debate on renewable
                                                                                                              environmental analysis system (see interview
            capacity to produce 40 GWh of electricity       energy is mainly focused on hydro, solar
                                                                                                              on opposite page).
            per year in addition to the generation of       and wind. However, bioenergy is an im-
            steam for local industry and the produc-        portant element in efforts against green-

       20   BULLETIN NovEmBEr 09

                                                                                                                                         environmental analysis
                                              procedures reduce
                                              financial risks
 Photo: tUomo mannInen

                                              Hilde Kjelsberg, vice-president and
                                              Head of the credit and analysis department
                                              at niB, explains how her department
                                              assesses the environmental impact
                                              of niB’s potential projects.
hilde Kjelsberg, vice-President and head of
the credit and analysis Department at nIb

How is the environmental signifi-             in Norway on opposite page.)                  nated soil or polluted groundwater.”
cance of a project measured?                      “Category B projects have the po-             “All category A projects are moni-
    “The Bank has a transaction team          tential for making a moderate environ-        tored, as well as other projects with an
responsible for all new loan proposals,       mental impact and must undergo a partial      identified need for follow-up. The moni-
and within that team we have dedicated        EIA. For the projects in the remaining        toring is carried out either by personnel
analysts, who cooperate and assess the        categories, we decide the need for infor-     from the environmental unit in my de-
projects from different angles. This is a     mation on a case-by-case basis.”              partment or by independent environ-
good way of evaluating a project as it                                                      mental experts.”
highlights that any environmental liabili-    What is an environmental impact
ties can directly influence the bottom        assessment (EIA)?                             Why do we need the system?
line and other risks of the project.”              “EIAs are usually carried out by             “As an IFI offering long-term fi-
    “NIB’s environmental categorisation       independent consulting firms, on behalf       nancing, we need to look at all the im-
system for projects is similar to the sys-    of the respective companies, and include      portant risk aspects, financial and envi-
tems used by other international finan-       project descriptions; policy, legal and       ronmental, from a long-term perspective.
cial institutions, such as the EBRD and       administrative frameworks; environmen-        The environmental sustainability of a
the World Bank Group. Loan applica-           tal impacts; as well as monitoring and        project must be long-lasting.”
tions are categorised into four different     management plans. The EIA process is              “I am proud to work in a bank with
groups, according to their potential en-      regulated by EU and national legislation.     such an explicit environmental mandate,
vironmental impact.”                          NIB utilises the EIAs in its own assess-      where the environmental analysis is
                                              ment process.”                                integrated in the total risk assessment
What are the categories?                                                                    process. I believe this puts NIB at the
     “Category A projects have the po-        What are the other means of                   forefront of the banking sector. NIB has
tential for making an extensive environ-      evaluating projects considered for            worked with environmental appraisals
mental impact and must undergo a full         funding?                                      for a long time, using the EU’s environ-
environmental impact assessment (EIA).            “Environmental audits are conducted       mental legislation as a guide. However,
These projects are made publicly availa-      in conjunction with company acquisi-          our environmental requirements were
ble on our website for a period of 30         tions or in projects where possible envi-     further emphasised in our revised envi-
days before a final decision on financing     ronmental liabilities have been identified.   ronmental policy adopted in 2008. This
is taken, so our stakeholders can give        An environmental audit is required for        policy and related procedures will con-
their opinions. NIB finances five to          projects in which there is an obvious risk    tinue to be developed in the Bank on an
eight category A projects per year.”          of the project sponsor facing costs of        ongoing basis.”
(Read more about a category A project         environmental damage, such as contami-

                                                                                                          BULLETIN NovEmBEr 09          21
bioenergy and reCyCling

                                                                                                                                                                 Photo: nIna näsman/nIb
                                                                                                                        the new bioenergy plant constructed by
                                                                                                                        Keravan lämpövoima is due to be ready
                                                                                                                        for commercial use in late 2009.

                          shrinking                                                                                         The new power plant will generate
                                                                                                                        heat and electricity mainly using wood-

                                                                                                                        based fuels and peat, and is, despite the
                                                                                                                        energy sources’ brown colour, a very
                                                                                                                        green alternative to the current gas-
                                                                                                                        based energy production in Kerava.
                          in Kerava, a city on the outskirts of the Helsinki                                            According to Risto Mäkinen, Managing
                                                                                                                        Director of Keravan Lämpövoima, gas is
                          metropolitan area, two huge facilities are taking form.
                                                                                                                        no longer as feasible a fuel option as in
                          one is a recycling centre being expanded and the other                                        the past, as import prices keep rising and
                          a new biopower plant. Both facilities will help reduce                                        deliveries remain uncertain.
                          carbon dioxide emissions and both have received
                          long-term loans from niB.                                                                     green and secure
                                                                                                                        “The security of domestically sourced
                                                                                                                        energy was appealing to the project from
                          Keravan Lämpövoima is building a new           in the 1990s, and now new biopower             the start and environmental considera-
                          biofuelled combined heat and power             plants are appearing in various corners        tions have played an important part since
                          plant, due to be ready for commercial use      of the country. Finland is one of the          the beginning of technical planning,”
                          in late 2009. The project is partly financed   leading countries in the world in utilis-      says Mr Mäkinen.
                          with a NIB loan of EUR 31.5 million.           ing bioenergy. The building of a new               While the energy mix is very flexi-
                              With three-fourths of the country          biopower plant in the city of Kerava is        ble, the production will in the beginning
                          covered by forests and woodland, there is      further strengthening this trend. What         be made up of around 40% wood-based
                          seldom a shortfall of wood chips and           makes this project special is that it brings   fuels and 60% peat. Some peat is always
                          forest residue in Finland. These biomass-      bioenergy to the Finnish capital region        needed for steady wood combustion, but
                          es found their way to the energy sector        for the first time.                            according to Mr Mäkinen, it will be ra-

                  22      BULLETIN NovEmBEr 09
                                                                                                                                                 bioenergy and reCyCling
tioned to a minimum: “the key focus lies           merce and industry, including the build-       plastic are separated and processed into
in utilising biofuels to the greatest extent       ing, retail and service sectors. Also paper    reusable material. The new line, a so-
possible.”                                         and cardboard waste from commerce and          called combination line, will be able to
    The new power plant is expected to             households are processed.                      process almost all kinds of waste and is
meet 75% of the district heating demand                                                           likely to be the only of its kind in Eu-
of the city of Kerava and provide 25% of           aLL Wood is Being reused                       rope. Mr Nivalainen explains:
the total electricity acquired by Keravan          The new line for receiving wood-based               “In Central Europe, recycling plants
Energia.                                           waste is already up and running and can        are usually built for one sort of waste
                                                   process 30 tonnes of waste wood and            only. In Finland, there is not so much
                                                   green waste per hour. Arto Nivalainen,         waste that it would be efficient to keep a
More recycling                                     Director of L&T’s Environmental Services,      single-waste plant up and running. We
                                                   explains the qualities of the new line:        need to concentrate our activities on
—less waste                                             “We receive all kinds of wood from        bigger entities, ensure high efficiency
                                                   industry, painted or otherwise treated. This   and thereby strengthen our competitive-
Lassila & Tikanoja (L&T), one of Fin-              reduces the quality of the wood’s reusabil-    ness,” says Mr Nivalainen.
land’s biggest companies in waste man-             ity. But in the cleaning process pieces of          “The amount of waste being reused
agement, is expanding its existing recy-           metal and other extra material are separated   on this site will increase from the cur-
cling plant in Kerava. Some 75,000                 from the wood. When the wood comes out         rent 75% to 90%. Most of the waste is
square metres, the equivalent of ten foot-         of the process it is as clean as used wood     reused or processed into biofuels and
ball fields, have been cleared and enor-           can be and ready to be burned in bio-          other burnables that can be used by
mous facilities are being built. NIB has           fuelled power plants,” says Mr Nivalainen.     power plants. Only a very small amount
contributed to the financing of the                     Not all power plants, however, are        is taken to the dump site,” says Jyri
project with a loan of EUR 15 million.             built in such a way that they can use chips    Nummela, Production Director of L&T.
    When the whole plant is ready in               made from used or treated wood, due to              Mr Nivalainen’s dream is that 100%
2010, the plant’s capacity will nearly             the filtering technology in the plant. This    of waste would be recycled. “Maybe this
triple, from 170,000 tonnes of waste to            is why L&T’s wood processing line is also      could be a reality already in 10 years,” he
some 450,000 tonnes per year. Luckily, it          able to process so-called clean wood such      concludes.
is not the amount of waste produced                as forest residue.
that will increase that much in the com-
ing years, but a matter of directing more          one oF a Kind
waste to recycling, as well as taking into         Another processing line can receive con-
use new technology.                                struction and demolition waste as well as
    The plant’s activities are focused on          commercial and industrial waste from
recycling waste materials from com-                which, for example, stone, metal, glass, and

        strong Mandate FuLFiLMent
        Both projects reflect NIB’s two mandates; to
        strengthen competitiveness and to enhance
        the environment. Lassila & Tikanoja’s recycling
        plant will further strengthen the company’s
        competitiveness. Keravan Lämpövoima’s
        power plant will boost the city’s electricity
        production capacity, as well as provide end-
        users, households and business alike, with
        low-priced energy.

        The projects will also enhance the environment
        by decreasing carbon dioxide emissions. Fuels
        from recycled products and burnable waste
        can replace conventional fossil fuels in energy

                                                                arto nivalainen and Jyri nummela at l&t’s new line for receiving wood-based
                                                                waste, which can process 30 tonnes of waste wood and green waste per hour.

                                                                                                                 BULLETIN NovEmBEr 09           23

                                                                                                              “NIB was able to offer us financing
                                                                                                          over a longer time period than other
                                                                                                          lenders would have done. The financing
                                                                                                          package we agreed on is very suitable,
                                                                                                          and matches our cash outflows and in-
                                                                                                          flows. And, of course, NIB is a secure
                                                                                                          lender, which at this point in time is a
                                                                                                          great benefit to us as a company.”
                                                                                                              The project, which will be complet-
                                                                                                          ed in 2011, is part of a service agreement
                                                                                                          signed between the City of Tallinn and
                                                                                                          Tallinna Vesi. According to Mr Plender-
                                                                                                          leith, the project brings significant envi-
                                                                                                          ronmental benefits to the city, but also
                                                                                                          direct financial benefits to the clients.
                                                                                                              “The current system with septic
                                                                                                          tanks is approximately two and a half
                                                                                                          times more expensive for the home-
                                                                                                          owners than it will be having the
                                                                                                          sewage treated by us.”
                                                                                                              “And as a homeowner in Tallinn
                                                                                                          myself, I’m looking forward to the new
                                                                                                          sewage pipes reaching my own proper-
                                                                                                          ty—making the daily life here so much
                                                                                                          easier for me and my family, as it will for
                                                                                                          some ten thousand other residents of
                                                                                                          Tallinn,” Mr Plenderleith concludes.

                                                                                                          construction work in the city
                                                                                                          district of nõmme.

                 new sewage pipe
                                                                                                           Photos: Pamela schönbeRg/nIb

                 eases daily life
                 through a sewage network extension partly financed
                 by niB, the water utility tallinna vesi is connecting
                 some 3,500 households to tallinn’s wastewater
                 treatment system.

                 In many of the old city districts of           A total of 100 kilometres of new
                 Tallinn, houses are still not connected     sewage pipes are being laid down, and
                 to the city’s water and sewage network.     additionally some 30 kilometres of storm
                 The wastewater is collected in private      water pipes and 10 kilometres of water
                 septic tanks, and then transported by car   pipes.
                 to collection points.
                     The use of septic tanks, with regular   Financing FroM niB
                 draining and cleaning, is as inconvenient   The network extension project started
                 for the users as it is hazardous for the    in 2007 and more than one third of the
                 environment, because of the risks of        new pipes have now been laid down. NIB
                                                                                                           “the new sewage pipes will make life easier
                 leakage or spills. Thus, many homeown-      has participated in the financing of the      for thousands of residents of tallinn,” says
                 ers in the city are certainly pleased now   project with a loan of EUR 20 million to      Ian Plenderleith, ceo of as tallinna vesi.
                 that Tallinna Vesi is expanding their       Tallinna Vesi. Its CEO, Ian Plenderleith,
                 water and wastewater network to reach       sees the financial cooperation with NIB as
                 some 3,500 new households.                  important for the company.

           24    BULLETIN NovEmBEr 09
                                                                                                                                                                     in brief
                                                                                                                                          Photos: cIty oF vIlnIUs
              the vilnius southern bypass is part
              of an international transport corridor.

city loan to vilnius                                                                         linking Kiev and Minsk, via Vilnius, to the
                                                                                             Lithuanian port of Klaipeda on the Baltic
                                                                                             Sea.The road will help significantly reduce
the Lithuanian capital, vilnius, has received niB financing                                  the flow of transit traffic through the city.
totalling eur 20 million for important transport infrastructure                                   The city has bought 100 new buses
projects as well as renewing its public transport fleet.                                     and 70 trolleybuses complying with EU
                                                                                             environmental regulations.
The new 15-year-maturity loan has been           the Vilnius southern bypass and the re-          “The effect of upgrading the road infra-
granted for financing the city’s investment      construction of main streets. The south-    structure and renewing the public transport
programme planned for 2009. Most of the          ern bypass, a four-lane road, is part of    fleet is obvious: the emissions have de-
loan has been used for the construction of       the international transport corridor IXB,   creased several times.The new buses and
                                                                                             trolleybuses are also attractive.The feedback
                                                                                             from the city’s inhabitants on the improve-
                                                                                             ments is very positive,” explains Vilnius City
                                                                                             Mayor Vilius Navickas.
                                                                                                  This is the first NIB loan to the
                                                                                             Lithuanian capital.The Bank’s involvement
                                                                                             in financing a municipal investment pro-
                                                                                             gramme in Vilnius is aimed at facilitating the
                                                                                             further economic development of the city.
                                                                                                  “A distinguishing feature of NIB is
                                                                                             professionalism and efficiency.The project
                                                                                             appraisal was rather quick and well per-
                                                                                             formed.We are pleased with NIB’s contri-
                                                                                             bution to the implementation of the city’s
                                                                                             large-scale investment programme,”
                                                                                             Mr Navickas says.

                                                                                                             BULLETIN NovEmBEr 09                                   25
in brief

                                                                                                                                            Photo: lIetUvos gelezInKelIaI
           improving rail traffic
           in Lithuania
           niB has provided a eur 15 million loan to the Lithuanian
           state rail infrastructure operator aB Lietuvos gelezinkeliai
           (Lithuanian railways). the loan is earmarked to co-finance
           the company’s investment programme for 2009–2011.
           “With the loan received from NIB, our       Rail Corridor I, connecting the Baltic            The main environmental issues are
           company is set to upgrade the core rail-    countries via Warsaw to the rest of the      rather typical for infrastructure projects:
           way infrastructure. The investment pro-     EU. NIB’s financing will also be used        land issues, the mitigation of transport
           gramme is aimed at improving rail traffic   for the acquisition of four heavy-weight-    impacts on sensitive areas, and leakage
           safety and bringing the rail transport      track motor cars.                            from the rolling stock. Lietuvos
           infrastructure into line with EU stand-         “By increasing the speed and             gelezinkeliai is dealing with them
           ards,” says Stasys Dailydka, Director       throughput, the Lithuanian railways will     directly, by implementing railway drain-
           General of AB Lietuvos gelezinkeliai.       become more environment-friendly,”           age and surface water treatment systems,
               The scope of the NIB-financed           says Mr Dailydka.                            and by outsourcing contaminated soil
           projects will include branches of Trans-        In order to speed up the trains, the     and hazardous waste treatment to
           European Rail Corridor IX, connecting       Lithuanian rail operator is installing new   specialised companies.
           Ukraine and Belarus to the Lithuanian       signalling, telecommunication, power              AB Lietuvos gelezinkeliai maintains
           sea port of Klaipeda as well as the ports   supply, and hot axle-box detection           all of Lithuania’s 1,766 kilometres of
           of Russia’s Kaliningrad Oblast. The         systems. This will help reduce the risks     railways and 109 railway stations.
           company will also continue developing       of accidents and damage caused to
           the Lithuanian part of Trans-European       the environment.

      26   BULLETIN NovEmBEr 09
visit us in Moscow!

                                                                                                                                                          in brief
in september niB opened new premises in russia’s
capital. From now on, niB’s general representative
for russia, igor Kovtun, is located in the premises
of the World Bank.
“The idea of NIB premises in Moscow                 environmental projects within the
came about after Igor had joined the                Northern Dimension Environmental
Bank two years ago. We are pleased with             Partnership.
the central location of the new premises                “With an increased focus on these
and its affiliation with another interna-           activities, the new premises in Moscow
tional financial institution,” says Søren           will largely facilitate NIB’s closer inter-
Kjær Mortensen, Senior Director, Head               action with Russia’s authorities and
of Europe and Eurasia at NIB.                       counterparties,” says Mr Mortensen.
    The new premises will provide
meeting facilities and working stations
for NIB staff visiting Moscow as well as
for NIB’s sister organisations if need be.              niB in MoscoW
    Russia remains a focus country and                  Visiting address:
an important partner for NIB. The                       Novinsky Garden Building,
Bank’s lending in this country is directed              Bolshaya Molchanovka 36/1, Moscow
to projects in the environmental, infra-                Telephone: +7 985 643 2264
                                                                                                      nIb’s general Representative for Russia,
structure and energy sectors. NIB is the                E-mail:
                                                                                                      Igor Kovtun.
lead bank in a number of high-priority

appointMents at niB

new staff
Mika Erkkilä (FI) has been appointed Senior         Kamal Grossard-amin (DK) has been employ-         Johanna Tyyskä (FI) has been appointed Legal
                      Country Analyst in the                         ed as Chief Funding Mana-                            Counsel in the Institutional
                      Country and Bank Analysis                      ger in the Funding and                               and Administrative Affairs
                      Unit at the Credit and Ana-                    Investor Relations Unit at the                       Unit at the Legal Depart-
                      lysis Department. He joins                     Treasury Department. He                              ment. She has previously
                      NIB from a position as                         joins NIB from a position as                         worked as Legal Counsel
                      Economist at the Bank of                       Vice President (Senior Dea-                          at the Nokia Corporation
                      Finland. His previous em-                      ler), Debt Capital Markets                           and as an Associate in the
                      ployment includes Nordea                       Origination at Danske Bank                           Helsinki and New York
                      and SEB.                                       Copenhagen.                                          offices of White & Case LLP.

internal appointments
david Bäck (FI)                                     liisa salminen (FI)
has been appointed                                  has been appointed
Corporate Analyst                                   Senior Manager
at the Credit and                                   at the Lending
Analysis Depart-                                    Department. She
ment.                                               is currently em-
                                                    ployed in the
                                                    Work-out Unit.

                                                                                                                      BULLETIN NovEmBEr 09               27
Want to
know more
about niB?
visit our WeBsite
We work hard on keeping the website up to date,
relevant and useful for our customers, owners, the
media and other stakeholders. The website displays
NIB’s statutory documents and policies, explains
the eligibility criteria for receiving a NIB loan and
reports on recent developments. The site features
searchable databases of NIB’s loans and in-depth
stories on selected financed projects.

Hear More oFten FroM niB
By subscribing to NIB’s electronic newsletter, you
will have an opportunity to hear more from us. The
NIB Newsletter is distributed by e-mail at least five
times a year. The NIB Newsletter has links to
resources, news, case stories, recent loans, and
other publications available on the Bank’s website.

HeadQuarters                             otHer contacts            reykjavík                           internet
                                                                   Kalkofnsvegur 1           
Fabianinkatu 34                          copenhagen                (in the building of seðlabanki
P.o. box 249                             grønningen 17             Íslands)
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Finland                                  Denmark                   Iceland
telephone +358 10 618 001                telephone +45 3314 4242   telephone +354 569 9996
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                                         oslo                      stockholm
                                         Dronning mauds gate 15    Kungsträdgårdsgatan 10
                                         (at eksportfinans)        (in the building of Jernkontoret)
                                         no-0119 oslo              P.o. box 1721
                                         norway                    se-111 87 stockholm
                                         telephone +47 2201 2201   sweden
                                         Fax +47 2201 2202         telephone +46 8 6799 726/727
                                                                   Fax +46 8 6799 729

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