Nefco's Green Recovery Programme for Ukraine – and the new municipal lending phase with NIB and the EU

Nefco, the Nordic Environment Finance Corporation, is an international financial institution established in 1990 and owned by the five Nordic countries: Denmark, Finland, Iceland, Norway and Sweden. In Ukraine it works mainly with municipalities, financing green infrastructure and public services. Its Green Recovery Programme for Ukraine was launched in July 2022, and in 2026 it entered a second phase that adds lending alongside grants.

Phase 1: grant-funded green recovery

• A multi-donor programme. The initial contributors were the EU, Denmark, Finland, Norway and Sweden, and Nefco also lists Iceland among contributors.
• Nefco’s programme page reports €514+ million raised, 100+ projects initiated, 60+ completed and 70+ ongoing. In June 2026 Nefco described the first, fully grant-funded part as over €500 million from the EU and the Nordic countries.
• Typical activities: repairing and modernising hospitals, schools and day-care centres; energy efficiency and renewables; district heating, water and wastewater; energy-efficient housing for internally displaced people; and Local Green Recovery Plans, together with capacity building, integrity and anti-corruption guidance.

Finland’s contribution: Finland has contributed €5 million in grant funding (announced December 2022), focused on schools, day-care centres, housing, health services and other critical infrastructure. One example is a nearly-zero energy school in Mykulychi, Kyiv region, replacing two war-damaged schools for about 200 pupils. It is built on a prefabricated timber frame, and the energy design was based on a report by Finland’s VTT.

Phase 2: back to lending – blended finance with the EU and NIB (from 2026)

On 25 June 2026, at the Ukraine Recovery Conference in Gdańsk, Nefco signed a letter of intent with the European Commission to resume lending to Ukrainian municipalities after a four-year pause:

• About €117 million in financing, including up to €7.15 million in technical assistance, and up to €70 million in guarantees are to be mobilised.
• The EU contribution under the Ukraine Investment Framework includes €40 million in investment grants, €5.15 million in technical assistance and EU guarantees of up to €63 million.
• The Nordic Investment Bank (NIB) will provide €70 million in loans, channelled through Nefco to Ukrainian municipalities.
• Focus: energy efficiency, water infrastructure, district heating and renewable energy in Ukrainian cities.
• Nefco expected the first projects in autumn 2026. Check Nefco’s news for the current status.

Who is this relevant for?

• Ukrainian municipalities and municipal utilities – the direct counterparties.
• Contractors, consultants and technology suppliers, including Nordic ones, in energy efficiency, district heating, water and renewables. Nefco says it has a network of municipalities, authorities, consultants and contractors in Ukraine and a local team in Kyiv. Supplier opportunities may arise through the procurements of individual projects.

Practical notes

• Nefco has a long track record in Ukraine: it reports financing 80 private-sector and more than 300 public-sector projects there since 2004.
• The shift from grants to blended finance means municipal projects will increasingly need to support some repayable financing. Expect more emphasis on project preparation and technical assistance.