Denmark is allocating a large sum of billions to help green investments get off the ground in developing countries. Towards 2030, the government has decided to increase a guarantee framework that will secure capital for investments in riskier countries, from two to 12 billion kroner.
This is according to Impact Fund Denmark, an independent state institution that invests in developing countries - previously known as the Investment Fund for Developing Countries.
- The guarantees make it possible to get private capital to work to create green transition, jobs and growth in developing countries, says Lars Bo Bertram, CEO of Impact Fund Denmark.
The announcement is made ahead of the start of the COP30 climate summit in the Brazilian city of Belém. The need for financing the green transition of developing countries is significant and with such high sums that it is considered unrealistic to secure it with pure grant aid from public coffers.
Therefore, the mechanism of providing public kroner as a guarantee for private individuals may be a way forward. Here, the Danish guarantees are used to remove the risk that may be for banks and investors in climate investments in risky markets such as in South America, Africa and Asia. This means that investors can often multiply their investments due to the security of the Danish guarantees.
- If we are to come close to doing more to solve climate challenges and their financing, we must try to be more innovative. You can only give a gift donation once, but with a guarantee you typically enable a bank to "leverage" the guarantee so that you get more money out of it. says Theo Ib Larsen, managing director of Impact Fund Denmark.
As a concrete example, Impact Fund Denmark enters into an agreement with the Inter-American Development Bank (IDB). Here, Denmark, together with Norway and Sweden, is providing a guarantee for 200 million dollars, equivalent to 1.3 billion kroner.
With this guarantee in its hands, the Inter-American Development Bank can mobilize up to four times as much money and secure 780 million dollars, five billion kroner, for climate financing in solar energy, wind power and energy storage.
- When we provide a guarantee, the bank can expand its business to climate projects in the country in question, says Theo Ib Larsen.
Denmark has used the guarantee model several times in recent years as part of a pilot project from 2022. It is the positive experiences from this that are spurring the increased guarantee framework of 12 billion kroner.
/ritzau/
Text, graphics, images, sound, and other content on this website are protected under copyright law. DK Medier reserves all rights to the content, including the right to exploit the content for the purpose of text and data mining, cf. Section 11b of the Copyright Act and Article 4 of the DSM Directive.
Customers with IP agreements/major customer agreements may only share Danish Offshore Industry articles internally for the purpose of handling specific cases. Sharing in connection with specific cases refers to journaling, archiving, or similar uses.
Customers with a personal subscription/login may not share Danish Offshore Industry articles with individuals who do not themselves have a personal subscription to Danish Offshore Industry.
Any deviation from the above requires written consent from DK Medier.
