NEFCO: a Nordic Alternative to State Grants for Ukraine’s Green Recovery

Last week we explained why many environmental projects do not fit comfortably into state grant programs. Today we look at an instrument that works differently.

At the Ukraine Recovery Conference in Rome in July 2025, Norway allocated an additional EUR 25.5 million for the reconstruction of Ukrainian infrastructure through NEFCO. This is not the first contribution and certainly not the last: since 2022, the Nordic Environment Finance Corporation has mobilized more than EUR 400 million for environmental projects in Ukraine.

Why is this important? NEFCO operates where Ukrainian public support programs often fail to reach environmental initiatives. It is a financial institution created by the governments of Denmark, Finland, Iceland, Norway and Sweden. In 2022 it launched the Green Recovery Programme for Ukraine with an initial budget of EUR 100 million.

• More than EUR 330 million has already been mobilized.
• More than 60 projects are in implementation.
• 30 projects have already been completed.
• The program works with more than 100 Ukrainian municipalities.

The key difference from many state grants is that NEFCO works directly with communities, without unnecessary intermediaries. Support is provided as grants and technical assistance and does not require repayment through taxes.

For environmental projects this changes the logic of recovery. Instead of forcing initiatives to meet rigid turnover or staffing requirements, NEFCO focuses on measurable ecological impact: lower CO₂ emissions, energy savings, renewable energy and practical infrastructure that communities can maintain.

NEFCO finances energy-efficient buildings, modernization of heating networks, critical water supply and wastewater infrastructure, and renewable energy solutions. For Ukrainian communities, this means a path to rebuild schools, hospitals and municipal systems in a way that lowers operating costs and strengthens resilience during energy crises.

The conclusion is simple: green recovery needs adult, practical instruments. NEFCO shows that environmental reconstruction can be transparent, measurable and useful for local communities right now.