Reaction: Leaders back the launch of new Tropical Forest fund at COP30 – Following President Lula’s COP30 speech today, where he stated that we need a roadmap to end deforestation, World Leaders gathered to mark the official launch of the new Tropical Forest Forever Facility.
- Brazil: USD 1 billion
- Colombia: USD 250 million
- Indonesia: USD 1 billion
- Netherlands: USD 5 million for the World Bank secretariat start-up costs
- Norway: USD 3 billion over a decade
- Portugal: 1 million Euros.
Countries from the Global South have so far committed more funds than the Global North. Germany is expected to announce its commitment on Friday, when Chancellor Friedrich Merz speaks at the COP leaders' plenary session. Others, such as France, China, and the UAE, expressed support but no funds this time around. The UK and France, who have been on the steering committee of TFFF, have yet to announce financial contributions. In the coming year as the fund is developed and bought into reality, these countries will be expected to invest in TFFF, a critical vehicle to protect tropical forests, as evidence of follow-through on their governments’ previous promises to protect standing forest, such as the Glasgow Leaders' Declaration on Forests and Land Use and the 30X30 commitment.
What is the TFFF?
The Tropical Forest Forever Facility, “TFFF”, is a new and innovative financing mechanism that would see forest countries paid every single year in perpetuity for keeping forests standing. A secretariat (called the TFFF) and an investment fund called the Tropical Forest Investment Fund (TFIF), which will invest sponsor money in emerging market bonds, avoiding fossil fuels, coal, peat, and any sectors linked to deforestation. The TFFF offers a new, budget-neutral model of nature financing that rewards countries protecting forests yearly with $4 per hectare protected. Investors’ initial contributions are invested by the TFIF, and the returns on those investments are used to pay back the original investors in full.
What makes TFFF different?
The TFFF leverages both private and public dollars to create a blended finance model that yields returns for investors as well as performance-based payments for protecting tropical forests. This is a shift from traditional development grants, which are paid from taxpayer dollars with no financial return.
At least 20 percent of the funds will go directly to forest-dwelling Indigenous communities, reflecting that Indigenous communities are core partners in shaping and implementing the initiative, and correcting the longstanding problem of conservation funds rarely reaching the Indigenous communities.
The TFFF model is not policy prescriptive. Rather, it enables tropical forest countries and Indigenous communities to implement their own conservation policies and initiatives.
Why does it matter?
Scientists estimate that tropical forests are responsible for holding back more than 1 degree Celsius of warming due to their ability to sequester vast amounts of carbon and cool the planet by making water vapor and clouds.
Tropical forest ecosystems’ ability to sequester carbon has been declining since the 1990s due to degradation and deforestation.
Tropical forests provide essential services–such as carbon sequestration, erosion control, and water filtration and management for entire countries and regions. Worsening deforestation is impacting supply chains, costs of commodities and economic security around the world.
New data shows that forest destruction is currently 63% higher than it should be if we’re to meet global targets to halt and reverse deforestation by 2030.
Deforestation and land use change account for 11% of global emissions, which will rise if deforestation keeps rising.
QUOTES
Lord Zac Goldsmith, former UK Minister for the Environment, said:
“This official launch is a monumental step towards ensuring forests are worth more alive than dead. The TFFF gives governments confidence that when they stop deforestation, they’ll be rewarded, year in, year out. And because of its design, investors will get their money back. At a time of reduced availability of funds, and increased decimation of the great forest basins, this is as close as you get to win win. The UK’s decision to walk away at the last minute is hugely frustrating, not least because we helped design the fund and put forests to the top of the agenda when we hosted COP26. But with or without the UK, history has been made here today, and those countries that are backing the TFFF will be thanked by generations to come.”
“The guarantee that at least 20% of TFFF payments will go directly to us, the Indigenous Peoples and local communities on the front lines of defending the biomes, is a historic victory that recognizes our leadership in the fight against climate change. This is not only a matter of justice; it is a strategy to save the planet. The TFFF is an opportunity for the world to wake up and finally understand that there will be no real solution to the climate crisis without us. If our rights are not guaranteed, no fund or project, no matter how ambitious, will succeed.
“Funds must follow legitimate paths, ensuring that territorial organizations themselves are the ones to receive them, without getting trapped in bureaucracy or becoming instruments of political dispute. These resources must go hand in hand with a genuine ambition to respect our land rights. With financing and rights guaranteed, we will be able to protect our territories as we have done for centuries, but with greater strength in the face of growing threats every day.”
Christopher Egerton Warburton (“Edge”), founding partner at Lions Head Global Partners, helped develop the TFFF and TFIF financial model, said:
“Today a seed has been planted. I have every confidence that TFFF will grow into a great tree, capable of adapting to its environment and changing seasons. The sponsor capital is like a tree guard protecting the tree in its early years, but that will not be needed once the tree matures. Once mature there is no reason that it cannot continue to grow forever. This was the challenge the TFFF team were set to deliver, and we are immensely proud to have had the opportunity to work with the Government of Brazil and its partners to reach today.
The TFFF/TFIF is built on the key foundations of markets and risk that underpin the entire capital market from banks to pension funds and insurance companies. Managing the market risk will be critical for the structure, and this is something that investors do every day. I am confident that when people see the tree start to shoot, they will want to come alongside to support its growth.”