Brazil Proposes $125 Billion Tropical Forest Facility

SadaNews - Brazil will become the first country to announce an investment in the "Forever Tropical Forest Facility" (TFFF), a multilateral financing mechanism with a potential budget of $125 billion, proposed to support the conservation of endangered forests worldwide.

Three sources familiar with the matter told Reuters that Brazilian President Luiz Inácio Lula da Silva will announce the investment on Tuesday at the United Nations in New York, in a move aimed at opening up more contributions from both rich and developing economies, which have been at odds over funding global climate policy.

The Brazilian government sees the potential for the project to be the main product it presents at the UN climate summit known as "COP30," which it will host in the city of Belém in the Amazon region in November.

The Brazilian government has not specified the amount it will invest, but two government sources, who requested anonymity to discuss private deliberations, told Reuters it will be a "large" figure designed to serve as a benchmark for other countries.

Chinese Finance Minister Lan Fenguan told his Brazilian counterpart Fernando Haddad in July that China would make one of the initial contributions to the fund, without disclosing its value.

China's investment would mark an important shift in climate financing, which has long relied on contributions from wealthy countries most responsible for global warming to date.

The climate finance fund has also received initial signals of support from countries like the United Kingdom, France, Germany, Norway, Singapore, and the United Arab Emirates, according to those involved in the negotiations.

Policymakers envision that the tropical rainforest fund will serve as a $125 billion fund that combines contributions from both the state and the private sector, managed like an endowment that pays countries annual subsidies based on the extent of remaining standing tropical forests.

To achieve this goal, Brazil needs major governments and philanthropic institutions to contribute the first $25 billion, an amount that could then attract another $100 billion from private sector investors, according to preliminary estimates.

The three sources stated that diplomats from countries interested in investing informed Brazil in recent months that their initial contributions would help set up their own announcements.

Through the upcoming announcement on Tuesday, Brazil aims to demonstrate that the country, which is set to receive the largest payments from the fund as it is home to the world's largest tropical forest, covering an area of 5.5 million square kilometers, is confident in its proposal, as described by one of the sources.

Details regarding the value and timing of the Brazilian investment are still under final discussions between the Finance Ministry and President Lula da Silva, who is scheduled to travel to New York on Sunday, while sources reported that a decision to invest in the fund has already been made.

Source: Reuters