COP30 host nation Brazil has pledged $1 billion to a new fund to protect rainforests it will launch at the UN climate summit in Belém this November. The announcement in New York by Brazil’s president marks the first investment in the fund, which is set to receive cash from nations and private investors.
The Tropical Forest Forever Facility (TFFF), proposed by Brazil, aims to raise funds to keep forests standing in tropical countries by generating returns on investments in financial markets. As initial capital, it is seeking $25 billion from donor countries and $100 billion from private investors such as pension funds, banks and asset managers.
The South American nation is the first to make a contribution to the TFFF, while other countries like Germany, Norway, UK and the United Arab Emirates have expressed support and participated in its design.
“Brazil will lead by example and become the first country to commit an investment in the fund with $1 billion,” President Luiz Inácio Lula da Silva told a high-level event on the sidelines of the UN General Assembly in New York on Tuesday. “I invite all partners in attendance to make equally ambitious contributions so that the TFFF becomes operational at COP30 in November.”
“In Belém, we will live the moment of truth for our generation of leaders. Tropical forests are critical to limit global warming to 1.5C. The TFFF is not charity. It’s an investment in humanity, in the planet against the threat of devastation caused by climate change,” Lula added.
Forest-rich countries currently face a funding gap of up to $70 billion every year to halt deforestation, researchers estimated in July. In August, all eight nations that are home to the Amazon Basin endorsed the TFFF, while the BRICS group of large emerging economies has also voiced support.
Donors urged to step up
Some forest nations at the high-level meeting in New York – including Colombia, Ghana and Madagascar, as well as UN and World Bank observers – gave their backing to the TFFF and praised Brazil’s contribution.
Colombia’s Environment Minister Irene Vélez said the TFFF “should be the beginning of the transformation of financial structures”. “It should be a revolutionary system that provides justice,” she added.
Vélez urged other donor countries to follow Brazil’s lead, warning “we don’t want another dead fund”.
Campaigners also reacted positively to Brazil’s pledge and urged rich nations to follow suit. Toerris Jaeger, executive director of the Rainforest Foundation Norway, said in a statement “it is remarkable that a tropical forest country is the first mover, with wealthier countries yet to commit”.
World Bank to host fund
Speaking in New York, World Bank CEO Ajay Banga confirmed that the bank will serve as trustee and interim host of the TFFF – a role it already fulfills for other climate funds such as the Fund for Responding to Loss and Damage.
“Our job is to lay the rails and maintain them so the trains can run. We want to leave founders, funders and participating countries free to focus on delivery,” Banga said.
The World Bank has been involved in the TFFF’s design, advising Brazilian authorities on how to structure the fund so it will qualify for a top AAA credit rating. This is key for the economics of the fund to work, as it would struggle to deliver on its promised payments with a lower rating.
Banga said Brazil’s leadership on the TFFF is advancing the “right market thinking” around forests. He added that, if scaled up, the fund’s benefits would result in “good economics and good development”.
Some developing countries and campaigners have been critical of the bank’s role in the loss and damage fund, accusing it of charging high hosting fees and compromising the fund’s independence. The US remains the largest World Bank shareholder.
Other pledges to follow
Despite Brazil’s initial contribution, other donor nations involved in the fund’s design did not come forward with pledges on Tuesday but emphasised its importance as a new way to encourage forest protection.
“The TFFF can not only help reduce deforestation, but also maintain incentives to protect forests in perpetuity. A launch at COP30 in the Amazon could be a game-changer for forest finance,” Andreas Bjelland Eriksen, Norway’s climate minister, said during the high-level event.
Bjelland Eriksen noted that some of the fund’s final details are in still process of being worked out, adding “Norway wholeheartedly wants the TFFF to become a reality and to succeed.”
The TFFF is not a negotiated fund under the UN climate convention, which means that richer developing countries could contribute without assuming traditional donor responsibilities under the UNFCCC. Some experts say this could help convince China and Gulf states to chip in for the initial $25 billion in public finance.
China and the UAE attended the event at UN headquarters and expressed support for a TFFF launch at COP30, but fell short of signalling any pledges.
“This mechanism when operational would be groundbreaking for climate finance and has the potential to reshape how we reward nature-rich countries in preserving our common natural habitats,” Razan Al Mubarak, the UAE’s envoy for nature, said in a statement read at the event.
