Scoop: Brazil hammers out details of forest fund ahead of COP30

In the lead-up to the 30th United Nations Climate Change Conference, or COP30, in Belém, Brazil, in November, the Brazilian government is preparing to launch a new fund that will measure which nations have done a good job at preserving their forests and reward them based on that data. The fund called the Tropical Forest Forever Facility, or TFFF, was originally announced at COP28 in Dubai in 2023. However, a new document acquired by Devex outlines how the fund will work and who will participate in discussions about its structure. The document will be discussed today and tomorrow at a closed-door meeting in London of delegates from 12 countries that have agreed to partake in the fund. In addition to Brazil, this includes tropical forest countries such as Colombia, the Democratic Republic of the Congo, Ghana, Indonesia, and Malaysia. Nontropical forest countries of France, Germany, Norway, the United Arab Emirates, the United Kingdom, and the United States will also participate. Technical advisers from the World Bank, the U.N. Development Programme, the Organization for Economic Cooperation and Development, as well as the Wildlife Conservation Society, Conservation International, the World Wildlife Fund, and Campaign for Nature, will attend, along with representatives of institutional investors, nongovernmental organizations, think tanks, and philanthropies. The meeting on Monday and Tuesday is meant to bring clarity on who the first donors of the fund will be, which multilateral development bank will host the fund, and what further details on the final structure will be. “The whole purpose of this meeting in London is to finalize who’s in,” said Clare Shakya, global managing director of climate at The Nature Conservancy. In October at the biodiversity COP16 in Cali, Colombia, five countries confirmed their support for the fund: Colombia, Germany, Malaysia, Norway, and the UAE. We could see more commitments come out of the meetings this week. How the fund would work The TFFF has two arms: investment and monitoring. The investment arm, which is called the Tropical Forest Investment Fund, or TFIF, has a goal of investing $125 billion — and generating around $3.4 billion across tropical countries — each year. Rather than relying on donor grants, the fund will get initial capital from investors such as donor countries and philanthropies, then invest the capital in a diversified fixed-income investment portfolio, according to the document. It will largely invest via bond markets with the target of a AAA rating. This institutional investment would provide 80% of the total, while long-term loans, guarantees, or grants from high-income sponsors would provide the remaining 20%. The goal is to get $25 billion in sovereign capital and leverage it to raise up to $100 billion in debt financing. The second arm, which is called the Tropical Forest Facility, or just “the Facility,” will manage forest cover monitoring, eligibility criteria, and fund distribution. The document stipulates that 20% of the funds must be channeled to Indigenous communities and locals. Based on satellite data, tropical forest countries will receive a fixed payment per hectare. Payments are discounted for each hectare lost. Countries with low and decreasing deforestation rates — below 0.5% annually — are eligible. They also are required to use transparent forest monitoring processes approved by TFFF and agree to the 20% payment to Indigenous Peoples and Local Communities. This would be the first permanent fund for tropical forest conservation. The goal is not to focus just on avoiding deforestation, but on maintaining existing forests and biodiversity in the long term. However, there are some important details still missing from the document. It does not clarify the deforestation rate by which a country would be included or excluded for payments or how exactly funding would get to local communities. The plan also says that each country would be conducting its own satellite data collection, but not all countries have advanced satellite technology to do that. “One of the issues that Brazil has in designing this is that their own system of forest monitoring is so advanced that maybe they haven’t yet recognized that many other countries are not at that stage and wouldn’t have the same monitoring systems,” Shakya said. “There’s a bunch of decisions that have to be made to make this function.” The concept note says that the TFFF “invites countries to use their own data or global data that meets stringent transparency and quality criteria” and that “TFFF seeks to provide a fair and transparent approach to forest measurement that aligns as much as possible with the unique contexts of participating [tropical forest countries].” It does not specify if technology would be provided to countries that don’t have the resources to access it. But, Shakya added, many of these issues are likely to be easily solved in the coming months. “These are decisions to be made further down the road,” she said. “Until you know who’s in to help and define some of the rules, it’s hard to get these final details through.” A hint at Brazil’s COP30 priorities With Brazil hosting COP30, experts say that launching the TFFF is going to be at the top of the country’s agenda in November. Following the meetings next week, Brazil is hoping to finalize the framework and then spend May to November speaking to investors and securing funding. Under President Luiz Inácio Lula da Silva, Brazil has significantly reduced deforestation rates. Forests and biodiversity will undoubtedly be at the forefront of the conference in Belém. “Everyone wants Brazil to have a successful COP30,” Shakya said. “Given the current geopolitics, it's really important to find some innovative instruments. But what’s really exciting about this is that it’s been driven by Brazil — southern owned and southern grown — which will be a good balance in this day and age.”