Finance

The challenge

The financial sector has very low direct emissions but has a large effect through investments and lending. The financial sector plays a role in all parts of the economy and therefore has the potential to become a key catalyst for not just a green Danish economy, but also a green global economy.

While the other 13 climate partnerships have the role of identifying areas requiring investment, the climate partnership for the financial sector has a pivotal role in providing the finance and ...

While the other 13 climate partnerships have the role of identifying areas requiring investment, the climate partnership for the financial sector has a pivotal role in providing the finance and investments necessary to establish wind farms, solar power, energy islands, Power-to-X, and energy systems, etc. to ensure the transition to a green economy and that the goal of reducing emissions by 70 per cent by 2030 and climate neutrality by 2050 is reached. Furthermore, through natural points of contact with customers, financial sector advisers can engage in dialogue with personal and business customers about the financing of, and investment in, sustainable measures.

The potential

The reduction potential of the financial sector itself is minimal, as the direct emissions are already very small. However, the partnership has made a commitment to reduce its direct emissions by 70 per cent by 2030 in accordance with the the Danish parliament’s legislated target. Additionally, we are establishing ambitions regarding the total lending to, and investment in, green finance. We measure annually if we are on track. The financial partnership has developed a CO2 model that provides a framework on how the individual members can collect and compile the most optimal information on their CO2e footprint. In addition, the partnership has been at the forefront of developing a common method for
calculating the CO2e emissions of the private sector and the public sector.

Recommendations

Long-term and predictable frameworks

Establish financing structures involving independent state loan funds that co-finance projects promoting sustainable development to lower investment risk. Support the transition towards a more sustainable agricultural sector via a special scheme, for example one that includes Vækstkaution (a growth guarantee to reduce risks)

Financing innovation, development, and the export of low-emission solutions

Finance innovation and the development of new technologies and new solutions for global climate challenges. Successful solutions developed in Denmark would support green growth in the coming years

Standardisation, digitalisation and access to data

To finance the green transition, it is critical that the financial sector has easy and inexpensive access to standardised and digital data regarding companies, households, etc. that need financing. Align this data with the future EU regulation on reporting for the financial sector

The role of the public sector

Utilise the role of the public sector as a buyer and construction project owner and
indirectly as a trendsetter to promote the green transition in Denmark

The role of the public sector

Increase the use of public funding and venture capital to finance development projects with the potential to reduce global emissions, such as the development of
e-fuels and the capture and storage of CO2 (CCS)

Framework conditions in Denmark and the EU on sustainable financing and investments

Continue the work to ensure that EU regulation in the financial field is ambitious,
evidence-based and useful, while limiting administrative burdens on financial and
non-financial institutions. Long-term, clear and attractive framework conditions in
Denmark and in the EU play a major role in enabling sufficient investments from
the private sector to further accelerate the green transition

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Cases

Lake Turkana – Africa’s largest wind farm

It took more than eight years to finalise the 310 MW large wind farm and it required a financial package of approx. EUR 600 million. Nordic Development Financing Institutions have provided a substantial part of the equity, while loan financing has been provided by several private banks and development banks.

VindØ (Wind Island)

A consortium of three of the largest Danish pension funds and energy companies are ready to finance a future energy island in the North Sea, called Wind Island. Wind Island can become a base for 10 GW offshore wind turbines, which correlates to 25 traditional offshore wind farms.

Contact

Finance Denmark
Birgitte Søgaard Holm
[email protected]

Insurance & Pension Denmark
Jan V. Hansen
[email protected]

70%

reduction of CO2e emissions by 2030

13-32

billion EUR. Electricity production and distribution has an investment gap of EUR 13 to 32 billion where EUR 8–23 billion will be expansion of renewable energy