World leaders launch fund to save forests, raking in $6.5 billion so far

BELEM, Brazil - World leaders attending a climate summit in Brazil launched a fund on Nov 6 to save the world’s forests, quickly raking in over US$5 billion (S$6.5 billion) in pledges to reward tropical countries for not chopping down trees.

The initial government commitments still fall far short of what is needed for the fund to attract the private investment it seeks, but Brazil’s President Luiz Inacio Lula da Silva still described the Tropical Forests Forever Facility (TFFF) as unprecedented.

Ultimately, Brazil – the fund’s political sponsor – seeks to create a US$125 billion facility that would pay out a share of profits to developing countries for every hectare of forest they leave standing.

Private investors would receive a return from funds invested mainly in emerging market bonds.

“Such a fund, which will help us, comes at the right time,” Mr Abe Assamoi, an Ivory Coast representative, said in Belem, a city at the edge of the Amazon rainforest.

“We have certainly lost a lot of forests but we have implemented a comprehensive strategy to reforest our country... We have ambitious goals”, but these require money, he added.

The fund was launched in Belem on Nov 6 as heads of state and government met ahead of the COP30 climate conference starting here next week.

Designers of the fund envision raising US$10 billion in initial contributions from governments within a year – a figure revised downwards after the initial lacklustre response.

The US$10 billion should be increased to US$25 billion in the longer term – start-up money that will then attract private investments worth another US$100 billion.

Brazil hopes the fund will create a reliable, long-term revenue stream, an alternative to tropical countries cutting down forests for economic gain.

Forests are often described as the earth’s lungs, expelling oxygen and taking in planet-warming carbon while housing a rich variety of animal and plant life.

Brazil had put in the first US$1 billion pledge for the fund, matched by Indonesia.

The UK said it would not contribute, while Finland’s government said it would be “difficult to find new resources” in an uncertain economic climate.

“Things can change, this is a long-term project,” Brazil’s chief climate negotiator Mauricio Lyrio told AFP about countries that have not yet joined the initiative.

Brazil’s Finance Minister Fernando Haddad was also positive, saying “we have already surpassed 50 per cent of what we envisioned” to raise until the next climate conference in 2026.

France pledged a conditional €500 million (S$752 million), Portugal added a more modest US$1 million and Germany made an unspecified commitment.

Norway on Nov 6 pledged 30 billion kroner (S$3.8 billion) for loans but with strings attached.

“It is vital to stop deforestation to reduce the impacts of climate change and limit biodiversity loss,” the Norwegian government said in a statement.

‘Weaknesses remain’

Some countries and observer groups have expressed reservations about the design and oversight of the fund.

Greenpeace has “cautiously” welcomed the TFFF, with its Brazilian executive director Carolina Pasquali saying that “weaknesses remain”.

“For example, where the money will be invested, what industries are out. We think it’s a good step forward but it needs work,” she said on Nov 5 aboard the organisation’s Rainbow Warrior flagship, docked in Belem.

Brazil has identified more than 70 developing countries that could be eligible for annual payments from the fund.

If they were to stamp out deforestation entirely, Brazil, Indonesia and the Democratic Republic of Congo could earn hundreds of millions of dollars a year each.

Mr Mauricio Bianco, vice-president of Conservation International Brazil, said forest conservation was the answer to two planetary crises at once: climate change and biodiversity loss.

“These are threats that demand financial commitments commensurate with their scale,” he said, adding it was imperative to put the fund into operation as soon as possible.

For Mr Lula, “forests are worth more standing than cut down”.

He told summit delegates: “In a few years, we will see the fruits of this fund. We will be proud to remember that it was in the heart of the Amazon rainforest that we took this step together.” AFP