(Nov 7): Brazil’s main plan to protect the Amazon rainforest, the centrepiece of its COP30 climate agenda, is moving ahead — with Norway playing a key role in its launch, though initial funding falls well short of expectations.
The Tropical Forest Forever Facility, or TFFF, designed to support the conservation of endangered forests worldwide, will receive around US$5 billion in pledged contributions — far short of its US$25 billion target. Norway and France have agreed to join Brazil in investing in the fund, while Germany will announce its contribution on Friday, Brazilian ministers said on Thursday.
“It is an unprecedented initiative,” President Luiz Inácio Lula da Silva said earlier at the launch of the fund in the Amazonian city of Belém. “Forests are worth far more standing than felled.”
The new fund could play a pivotal role in forests protection as the current climate policies and green finance remain insufficient to address the magnitude of the global challenge, said Lula, who is presiding over this year’s United Nations climate summit.
The TFFF is Brazil’s signature initiative at COP30, with initial ambitions for pledges of US$25 billion that could be leveraged to create a US$125 billion vehicle aimed at preserving tropical forests. Finance Minister Fernando Haddad said at the Bloomberg Green at COP30 conference in São Paulo on Tuesday that he believed the fund may raise US$10 billion by next year.
The funds will be placed in a diversified portfolio designed both to repay investors and to reward countries for conserving their forests. Under the plan, nations will receive a fee for every hectare of forest conserved. Brazil, Colombia, Indonesia and the Democratic Republic of Congo are among the countries that would benefit most.
See also: Sustainability and environment minister says COP30 climate transition talks show optimism
“We achieved over 50% of what we had imagined for the end of next year, and we will keep working,” said Haddad in Belem. “The initial investment that’s being done is auspicious. You can anticipate that, after this first investment that we will have a very good start.”
President Lula was the first to announce an investment, followed by Indonesia’s Prabowo Subianto.
Norway pledged about US$3 billion in loans over 10 years, which will be disbursed through 2035 and must be repaid by 2075, according to a government statement on Thursday.
See also: Hong Kong’s financial secretary calls Trump’s climate pullback ‘disappointing’
The funding comes with conditions: the TFFF needs to secure at least 100 billion Norwegian kroner from other donors by 2026; Norway won’t provide more than 20% of the total financing; and the funding model must be sustainable and maintain an acceptable level of risk.
Over 50 countries have endorsed the declaration of support for the launch of the fund. Other countries that haven’t announced investments are still engaged in conversations, including China, Netherlands and United Arab Emirates, according to Haddad.
The government never expected to raise US$25 billion by COP30 and the summit will serve to introduce the TFFF to the world, he said.
“The backing from almost 50 countries is encouraging and marks an important start for the TFFF, reflecting growing recognition of the need for collective action to protect and restore tropical forests,” said Mirela Sandrini, interim executive director of WRI Brasil. “However, the pool of those that have actually committed funding so far remains limited. Broader support will be essential if the Facility is to become fully operational.”
Challenges
Brazil’s efforts to convince developed countries to invest in the fund were made difficult in a moment when potential investors face budget constrains.
The absence of an announcement of investment from the UK, for example, was noticeable in a time when the country is trying to tackle its surging debt burden.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
The fund uses a blended finance model, seeking to invest its assets to generate a higher return than what it owes investors, and then using the difference to fund rainforest preservation.
That “spread is not a money faucet, but a risk premium,” BloombergNEF analysts wrote in a factbook about biodiversity finance published on Thursday. “Poor performance of emerging market assets, which face a diverse host of economic and political risks, will not only nullify forest payments, but also see development finance absorb private investor losses.”
Experts say clarity on the fund’s governance and structure will be crucial to ease concerns about its ability to generate sufficient returns for investors while providing payments of about US$4 per hectare to countries protecting their rainforests.
“Mobilising resources alone is not enough,” said Sandrini in a note. “Its operation must be fail-safe — with transparent oversight and a focus on protecting intact tropical forests, while genuinely engaging Indigenous Peoples and local communities.”
Uploaded by Felyx Teoh
