The eight Latin American nations that are home to the Amazon Basin have pledged support for a new global fund that will seek to channel finance for rainforest conservation, in a major vote of confidence for one of Brazil’s flagship initiatives as host of the COP30 UN climate talks in November.
In a joint declaration issued at the Amazon Summit held in Bogotá this week, the eight countries that make up the Amazon Cooperation Treaty Organization (ACTO) pledged to support the Tropical Forest Forever Facility (TFFF) as an “innovative mechanism” to mobilise finance for climate and nature protection.
The TFFF was proposed by Brazil in 2023 as a global investment fund that would allocate a share of its returns to rainforest conservation initiatives around the world. The fund will be backed by an initial, one-time $25-billion contribution from donor nations, along with $100 billion in private funds.
The declaration from Amazon nations also invites “potential investor countries” to “announce substantial contributions” intended to guarantee the fund’s quick activation. Those that have expressed interest so far include Britain, Norway and the UAE.
Brazilian President Luiz Inácio Lula da Silva told the summit in Colombia: “We need this to be the most serious COP of all, one that doesn’t end in empty speeches and promises”. “We’re fed up with promises,” he added. “I want to see who’s going to put up the money to keep the forest standing.”
“The proposal that we arrive united at COP30 in Belem is fundamental,” said Colombian President Gustavo Petro in a speech alongside other South American leaders, including Bolivian president Luis Arce, Ecuador’s vice-president María José Pinto and Venezuelan vice-president Gabriela Jiménez.
The Amazon summit in Bogotá follows a meeting two years ago in the COP30 host city of Belém where ACTO leaders issued a declaration in support of Brazil’s COP30 presidency and laid the groundwork for co-operation around the world’s largest rainforest.
Amazon declaration omits fossil fuels
Despite calls from Indigenous groups and civil society for ACTO leaders to halt oil and gas developments in the Amazon Basin, fossil fuels were not explicitly mentioned in the Bogotá declaration. Leaders did, however, pledge to “advance toward a just, equitable and orderly energy transition”.
Alex Rafalowicz, executive director of the Fossil Fuel Non-Proliferation Treaty Initiative, said “the Amazonian presidents missed the opportunity to recognise that oil and gas extraction is one of the greatest threats to the Amazon.”
COP30 host Brazil is one of the countries that has major plans to explore for oil and gas in the Amazon region, despite significant opposition from environmental and Indigenous groups. Its neighbour Guyana has rapidly ascended to become a major oil producer in a partnership with fossil fuel giant ExxonMobil.
Campaigners at the Amazon summit in Bogotá said Venezuela, Ecuador and Perú explicitly opposed any mentions of fossil fuels in the final ACTO text.
“Amazonian presidents are not listening to the voices of the Indigenous peoples who have protected the forest since ancient times. They ignore the fact that we are experiencing a climate crisis,” said Juan Bay, president of the Waorani People in Ecuador.
Bay was one of the leaders of a referendum campaign in 2023 that forced Ecuador to agree to stop drilling of oil and gas blocks in the Yasuní National Park. But the government has failed to meet this obligation.
One victory for Indigenous people at the Bogotá summit was the creation of a new advisory body, called the Amazonian Indigenous Peoples Mechanism (MAPI, in Spanish). Each country will be represented by a government and an Indigenous delegate, advising on issues like deforestation and species trafficking.
TFFF: a “promising” solution?
In the lead-up to COP30, Brazil has been drumming up support for the TFFF from donor and rainforest countries, as well as investors. The fund will be officially launched in Belém, as one of the main initiatives led by the Brazilian COP presidency.
In a new concept note for the TFFF issued this week, Brazil laid out the technical details of how the investments would be structured. Among its provisions, the new fund will only pay rainforest nations that can prove results in reducing deforestation and forest carbon emissions.
The mechanism consists of two platforms: the Tropical Forest Investment Fund (TFIF) will aim to generate enough returns to pay investors back and use surplus cash to support forest initiatives, while the TFFF will oversee and set the rules for the payments to rainforest nations, also in Africa and Southeast Asia.
According to the concept note, the fund will borrow money from investors at interest rates of around 5% and then invest in higher-yielding emerging market bonds paying around 8% interest. This would allow the fund to pay an estimated $4 per hectare to rainforest nations – an expected $2.8 billion in total disbursements per year with the remainder going to repay sponsors’ capital.
Countries in the BRICS bloc of emerging economies – among them, crucially, China – have pledged support for the new fund. In a June declaration, the group’s leaders said the TFFF was a “promising blended finance instrument” that could “generate a predictable and long-term funding stream to finance the conservation of standing forests”.
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Emerging market risk not factored in?
But some critics say the fund is not the “elegant” solution it promises to be. Researchers Max Alexander Matthey, founder of the non-profit Climate Impact Auctions, and Aidan Hollis, economics professor at the University of Calgary, called it a “risky gamble” with taxpayer money in an op-ed published this week.
Matthey and Hollis argue that emerging market bonds carry more risk, and pointed to defaults in Argentina, Venezuela, Ecuador and Sri Lanka as examples of where things could go wrong.
“For the strategy to work, market yields on emerging market bonds would have to be structurally too high. But they’re not – they reflect real, systemic risks: defaults, volatility and instability,” the researchers write. “As long as nothing goes wrong, it looks like a win-win. But a single sovereign default could topple the entire structure.”
The latest TFFF concept note rules out investments in polluting industries such as coal, oil and gas, something that was praised by campaign group Global Witness. But the nonprofit called on governments to reinforce their participation in the fund with strong laws to stop banks and other financial actors more generally funneling trillions into businesses “responsible for forest destruction policies”.
“National governments must act now with binding rules, or it’s like bailing out a sinking ship without fixing the hole,” said Ashley Thomson, senior policy advisor with Global Witness.
