Wall Street investors have earned billions financing activities linked to deforestation in the tropics, with forest loss reaching record highs last year. But a major proposal by Brazil’s COP30 presidency wants to turn financial markets into allies of the rainforest.
The Tropical Forest Forever Facility (TFFF), a proposed new fund seeking to raise cash for conservation efforts in tropical countries, is set to be launched at the COP30 climate summit in Belém later this year.
Brazilian President Luiz Inácio Lula da Silva has rallied behind the initiative and secured key endorsements from the eight South American nations home to the entire Amazon Basin. Private banks and countries in the BRICS group of large emerging economies have voiced support.
COP30 president André Corrêa do Lago has said “the TFFF is the right answer for forest conservation”.
The initiative comes as developing countries have complained about being unable to access existing forest funds at the Global Environment Facility (GEF), while foreign aid budgets which have funded forest conservation shrink in the US and Europe.
Yet finance needs in developing countries are large and growing, with estimates ranging between $20 billion and $72 billion every year to protect forests. In contrast, in 2022, the total finance destined for forests was just $2.3 billion.
-
Amazon nations pledge support for Brazil’s COP30 rainforest fund
In a joint declaration issued at the Amazon summit, eight South American nations pledged to support Brazil’s Tropical Forest Forever Facility (TFFF) -
The Amazon rainforest emerges as the new global oil frontier
Half a century of oil drilling has left the world’s largest rainforest scarred by deforestation and pollution. Now it is bracing for a new wave of fossil fuel extraction -
COP30 PR firm found to be “uniquely reliant” on fossil fuel clients
Edelman relies on work with oil and gas firms like Shell and Chevron for a higher percentage of its income than any other PR agency, a new report found
What is the Tropical Forest Forever Facility (TFFF)?
The TFFF is being proposed as a blended finance instrument, with funding from both public and private sources. It would seek to directly pay tropical countries that can show effective forest protection.
On paper, the TFFF will get its money similarly to an investment fund. Donor countries and private investors put their money in the fund, which then invests the capital in financial markets. A part of the returns is used to pay back investors and what remains is allocated to forest protection in tropical countries.
“Think of a bank that runs normal market operations but that directs its profits not to shareholders but to forests,” said João Paulo de Resende, undersecretary for economic and fiscal affairs at Brazil’s Ministry of Finance.
In its most recent version, Brazilian officials propose that the fund starts with $125 billion in capital, of which $25 billion would come from donor countries and $100 billion from private investors.
The payments to forest countries would depend on the returns of the fund, but an 8% yield would allow the fund to pay at a rate of about $4 per hectare of protected forest — which in total could raise an estimated $2.8 billion for rainforests every year.
The Brazilian government has said donor countries could include the United Kingdom, Norway and the United Arab Emirates, while private investors endorsing the fund include investment managers PIMCO, Bank of America and Barclays.
Recipients would include tropical countries in major rainforest basins such as Colombia, the Democratic Republic of Congo (DRC) and Indonesia, among others.
How is the TFFF different from other climate funds?
Other UN funds like the Green Climate Fund (GCF) or the GEF mostly give out one-time grants to countries that reduce emissions through projects and programmes to protect or restore forests (an approach known as REDD+). The TFFF would instead aim to reward countries that have kept their forests standing and can show results.
This “results-based payments” system is not new – the GCF, for example, gave out more than $500 million between 2015 and 2020 in this way. However, a fund solely for countries that can show success in preventing deforestation is a new way to target large intact rainforests, which struggle to receive REDD+ funding, said Torbjørn Gjefsen, international forest finance advisor at the Rainforest Foundation Norway.
“There is complementarity. It’s not competing with REDD+,” said Gjefsen. “If fully operational, it will substantially increase the amount of funding available for this kind of results-based payments.”
Amid a context of tighter foreign aid spending, another key difference is that the TFFF would seek to attract investments rather than depending on donations from public budgets.
The fund’s concept note claims that, if fully operational, the one-time investment from donor countries would allow payments to forest nations for as much as 40 years in the future.
Finally, unlike the other UN environmental funds, the TFFF is being proposed as a mechanism hosted by the World Bank outside of UN environmental conventions.
Sandra Guzman, founder of the Climate Finance Group for Latin America and the Caribbean (GFLAC), said this could potentially help convince large developing countries like China to contribute funds without having to assume donor-country responsibilities at the UN negotiations. Chinese officials have welcomed the TFFF and said they “hope it plays a positive role”.
Colombia announces fossil fuel phase-out summit to be held in 2026
How will the TFFF make money from financial markets?
In tapping financial markets, the TFFF will have to also deal with risk. If investments don’t generate the expected yields, payments to forest countries would need to be paused and paid out later, de Resende said.
The Brazilian government’s estimates show that if the TFFF had been operating in the last 20 years, it would have been under financial stress on two occasions: during the 2008 financial crisis and during the COVID-19 pandemic. The TFFF’s models project a 60% chance that payments to forest countries would need to be slightly reduced at some point in the fund’s lifespan.
The Brazilian authorities remain optimistic, as most value fluctuations are likely to be small, they say. De Resende said that “over the long run, this risk is minimal.”
The TFFF’s main strategy is to get cheap money from investors and lend money to emerging economies at much higher interest rates. Emerging market bonds would account for as much as 80% of its investments.
Critics say this could be a risky strategy, which is precisely why these emerging countries pay higher interest rates. “The risk of Egypt’s state bond is just not the same as the risk of US treasury bonds,” said Max Alexander Matthey, co-founder of Climate Impact Auctions.
Another key point is that, for the fund to achieve the promised payments, it would need to borrow money at a very low cost, so it would need a top-category AAA rating from credit rating agencies. Brazilian authorities have been in discussion with agencies on this and have said they aim to receive a “shadow rating” for the TFFF before COP30.
As part of the strategy, the fund will also exclude any investments in polluting industries such as coal, oil and gas.
Can COP30 turn adaptation talks into real-world investments?
Who is allowed to receive payments from the TFFF?
According to the fund’s concept note, the 74 countries that are home to rainforests could be eligible to apply for TFFF payments if they meet the required criteria.
To access funds, tropical countries must demonstrate that they are reducing deforestation in a defined area, have a robust forest measurement system and a set of forest policies, and demonstrate that the payments will not replace national resources.
Countries would also have to commit to reserve at least 20% of payments for Indigenous people. While an important step, Guzman said this could be tricky in practice because of the challenges of directly transferring funds to these communities.
“Indigenous communities do not always have formal legal structures or administrative capacity,” she said. “It’s not easy, but it is desirable that communities start building these legal mechanisms.”
Currently not many forest countries meet the minimum requirements to be eligible for TFFF payments.
Online platform TFFF Watch, built by NGO Plant for the Planet, calculates that major countries like the DRC and Indonesia would not qualify for payments due to high deforestation rates, and would be missing out on annual deals worth $400 million and $450 million respectively.
On the other hand, Papua New Guinea would benefit greatly if the TFFF goes into operation exactly as laid out in its concept note, according to TFFF Watch. The country is already eligible for around $120 million in annual rewards, the platform estimates.
As shown by recent wildfires in the Amazon, some countries could end up losing or seeing some of their forests degraded even with robust protection measures in place. In these cases, countries would get their payments cut by the same ratio as they lose forests.
Yet once they do receive TFFF funding, forest countries will have full authority over how to use the funds.
Brazilian government authorities have sent a letter of intent to the World Bank, which will have to decide by October whether it will host the TFFF. By COP30, Brazil plans to sign a declaration of intent with donor countries.
The post Explainer: Brazil’s “right answer” to forest finance turns to markets to keep rainforest standing appeared first on Climate Home News.
Explainer: Brazil’s “right answer” to forest finance turns to markets to keep rainforest standing
June Rubis is a steering group committee member for the Cali Fund, from Sarawak in Malaysian Borneo.
At COP16 in Cali, governments made a significant commitment: at least half of the funding from the new Cali Fund should support the self-identified needs of Indigenous Peoples and local communities, including women and youth. It was a watershed moment for multilateral benefit-sharing.
The challenge now is to translate that commitment into access arrangements that recognise the different institutions, priorities and decision-making processes of Indigenous Peoples and local communities.
For generations, biodiversity and traditional Indigenous knowledge have provided significant value to companies who depend on nature’s genetic diversity to discover new drugs that fight diseases, create products that improve health, and grow crops resilient to extreme heat and flooding events. While some compounds are sampled directly from the source country, increasingly the digital blueprints are held in online public databases which are freely accessible to use for innovation and research.
Countries urged to ramp up “insufficient” nature policies at COP17
The Cali Fund was established at COP16 to encourage commercial users of Digital Sequence Information, or DSI, to share benefits arising from its use. Estimates suggest it could generate over $3.5 billion a year – a stark contrast to the modest $10,656 currently committed to the fund from just five SMEs, underlining how much progress must be made at COP17 over the next two weeks.
The COP16 decision that set up the fund offers two routes for money to reach Indigenous Peoples and local communities: through government authorities, and through direct payments to institutions identified by Indigenous Peoples and local communities themselves.
Varied ways of organising
Indigenous Peoples and local communities organise through a wide range of institutions. Some have national or regional organisations experienced in managing international grants. Others work through territorial organisations, customary institutions, community associations, cooperatives or networks. Some have professional finance teams and audited accounts; others have extensive experience governing territories, collective resources or conservation work without having been organised around international funding requirements.
For direct access, some questions are already apparent. Which institutions should be able to receive funds? How should they be identified? What fiduciary standards should apply? How should safeguards and accountability work where institutional capacities differ? What support may be needed where institutions have strong community mandates but less experience with international finance?
Comment: Protecting nature is a public duty, not a Wall Street profit opportunity
If access is designed mainly around institutions that already meet the expectations of large international finance mechanisms, early funding will tend to favour those already familiar to funders. They will gain further experience and become better positioned for future funding, while institutions with less administrative capacity may remain outside the system despite strong community mandates and long histories of stewardship.
These first decisions matter most, because they set the terms for everyone who follows.
The role of intermediaries requires care. Some Indigenous organisations may want a fiscal host to hold and manage funds on their behalf. Communities may choose to work through an NGO they trust. Government-facilitated arrangements may work well in particular national contexts.
What matters is the function an intermediary performs and the authority that comes with it. Providing administrative support is different from deciding which Indigenous organisations qualify, which priorities can receive support, or how success will be assessed. Direct access means communities keep that decision-making authority.
Decision-making power
The COP16 decision refers to institutions that Indigenous Peoples and local communities identify. But authority among Indigenous Peoples does not sit in one kind of body. It may sit with territorial organisations, customary institutions, community associations or combinations of these. Legal recognition and customary authority do not always align neatly.
Global deforestation slowed in 2025 but Brazil’s election could undo “fragile” gains
An important feature of the Cali Fund’s governance is that Indigenous Peoples and local communities participate as full members of the Steering Committee, rather than as observers. Seven Indigenous Peoples and local community representatives, one from each of the seven socio-cultural regions, participate in consensus-based decision-making alongside representatives of governments and UN entities. Six additional representatives from civil society, scientific institutions and the private sector participate as observers.
That representation carries responsibility. Institutional legitimacy, access and representation take different forms across the seven socio-cultural regions. Indigenous Peoples and local communities members therefore have an important role in bringing those differences into the Fund’s governance and in ensuring that arrangements developed for one context do not become the assumed model for everyone else.
Safeguards and clear responsibilities
COP17 can establish the core principles and direction, while allowing operational pathways to develop in ways that respond to different regional contexts. The decisions countries take in Yerevan will shape how that flexibility is realised in practice.
The choices made around access will influence which institutions are able to participate, which routes become established and which forms of authority are recognised within the funding architecture. The aim should be an architecture with enough structure to maintain confidence while allowing for different forms of Indigenous and community governance.
A credible direct-access pathway will need safeguards, financial oversight and clear responsibilities. This would give the 50% commitment a stronger institutional foundation.
The Cali Fund’s importance will ultimately depend not only on how much funding reaches Indigenous Peoples and local communities, but on whether they are able to determine how the money is accessed, governed and used. This requires access pathways that recognise their institutions, priorities and decision-making processes, rather than requiring them to conform to a single predetermined model.
The post COP17 must settle who decides how Cali Fund money is disbursed appeared first on Climate Home News.
COP17 must settle who decides how Cali Fund money is disbursed
The UK government has approved extraction at the Jackdaw gas field in the North Sea, despite acknowledging that this decision could make it harder for Britain to convince other countries to move away from fossil fuel production.
UK energy secretary Miatta Fahnbulleh approved the drilling on Wednesday after months of high-profile debate, fuelled in part by interventions from US President Donald Trump. She argued that the project would boost energy security in the wake of the Middle East fossil fuel crisis, protect hundreds of jobs and add £2.9 billion ($3.88bn) to the UK economy.
She said Jackdaw’s gas would be cleaner than imported gas and would not prevent the UK from meeting its legally-binding carbon targets and its goal of net zero by 2050. As the field is already licensed, she said extraction was consistent with the Labour Party’s 2024 manifesto promise not to issue any new oil and gas licenses.
The same morning, the government announced a new Energy Wealth Fund to reinvest oil and gas revenues in the climate transition. It will start with £2 billion ($2.67bn) from the government and be topped up over time with tax revenues from offshore oil and gas production.
Climate campaigners in the UK and abroad were quick to condemn the decision, while a leading legal expert told Climate Home News it goes against the advice of the International Court of Justice. Meanwhile, the government’s own documents reveal that it recognises the drilling could damage the UK’s reputation and its ability to push forward the global transition away from fossil fuels.
“Climate leadership” blow
The 92-page decision document says Fahnbulleh “acknowledges that international standing on climate is important and accepts that a decision to grant consent may not further the UK’s international climate leadership.”
It adds: “She acknowledges concerns about the potential implications for the UK’s credibility and influence – including the difficulty inherent in encouraging other states to move away from fossil fuel production while the UK continues, in a limited and transitional way, to draw on its own domestic resources.”
While noting that Jackdaw has not been issued with a new license – just permission to extract gas – the document says Fahnbulleh “accepts this does not fully resolve the underlying tension in the UK’s position” but “considers this alongside the substance of the UK’s wider record [on emissions reduction], which remains significant”.
It continues that she accepts these concerns are “legitimate” and weigh against approving gas extraction, but only gives this argument a “moderate negative weight” set against the benefits of gas production.
“Huge” wrong signal
In international climate talks, the UK has long supported the transition away from fossil fuels and is one of very few major oil and gas producers to ban new licenses. Across the North Sea, the Norwegian government continues to make offshore areas available for oil and gas exploration through annual licensing rounds.
Climate experts and campaigners shared the concern, acknowledged in the decision document, that approving Jackdaw could set a precedent for fossil fuel production elsewhere. Sam Fankhauser, professor of climate change economics at Oxford University, said the direct climate impact of Jackdaw is “much smaller than the debate around it would suggest” but the “wrong signal it sends, however, is huge”.
-
Carbon capture industry faces tough future, as UK raids green spending
Despite a spate of projects getting underway, the mood at an industry conference in London this week was low with government subsidies set to shrink -
Paris Agreement committee names three countries snubbing it over NDCs
More than 30 countries have failed to submit an NDC, but only three have repeatedly ignored the committee’s efforts to engage with them -
Turkish giant sponsoring COP31 cut climate goals then cashed in on oil boom
COP31 sponsors should be screened for “climate integrity”. Yet Koç Holding has become a top partner while its oil refiner runs flat out and its climate targets slip
Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change, said that