World leaders attending a climate summit in Brazil have launched a flagship global fund designed to reward tropical countries for not chopping down their trees. While proponents say it could be a game changer for climate finance, critics fear it will enrich governments without obliging them to take meaningful action to protect the environment.
Brazilian President Luiz Inacio Lula da Silva called the Tropical Forest Forever Facility (TFFF) an "unprecedented initiative" at its launch on Thursday in Belem, where Brazil is hosting the upcoming UN Cop30 climate summit.
Ultimately, Brazil – the fund's political sponsor – is looking to create a $125 billion pot to invest in bonds, with a share of the profits paid out to developing countries for every hectare of forest they leave standing.
"Forests are worth more standing than cut down," said Lula. "In a few years, we will see the fruits of this fund. We will be proud to remember that it was in the heart of the Amazon rainforest that we took this step together."
Initial $5 bn in pledges
Brazil believes TFFF is the future of climate finance because it replaces grants with a more scalable investment model; private investors would also get a return from funds invested mainly in emerging market bonds.
The facility hopes to raise $10 billion in initial contributions from governments within a year. Half of that has already been secured, according to Brazil’s Finance Minister Fernando Haddad.
Brazil put in the first $1 billion pledge, matched by fellow forest nation Indonesia.
Norway is so far the biggest pledger, promising to invest up to $3 billion over 10 years.
France has pledged €500 million by 2030 – but only if the fund meets strict conditions on transparency, science-based monitoring and measurable results.
On the eve of the launch, the UK announced it would not contribute, while a representative from Finland's government said it would be "difficult to find new resources" in an uncertain economic climate.
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'Promising mechanism' or 'false solution'?
Primary forests are often described as Earth's lungs. Expelling oxygen and absorbing planet-warming carbon, as well as being a reservoir of biodiversity, they're crucial in fulfilling the objectives of the Paris Agreement.
Yet only 4 percent of climate finance is allocated to protecting them. Some 489 million hectares were lost to deforestation between 1990 and 2025 – more than the area of the EU.
Brazil has identified more than 70 developing countries that could be eligible to receive annual payments if they met the eligibility criteria, namely keeping deforestation below a certain rate.
If they were to stamp out deforestation entirely, countries like Brazil, Indonesia and the DRC could earn hundreds of millions of dollars a year each.
The World Wildlife Fund (WWF), involved in setting up TFFF, hailed the initiative as "historic", saying it "changes the game" for "nature and climate finance".
Toby Gardner of the Stockholm Environment Institute told RFI that the fund, while imperfect, was "one of the most promising mechanisms proposed in decades to conserve tropical forests".
However, Alain Karsenty, an economist at French agricultural research centre Cirad, questioned how realistic the financial model was. "Borrow at 5 percent and place at 8 percent – it would be magical money," he told RFI.
The Global Forest Coalition, an NGO network of 120 members in 68 countries, has described TFFF as a "false solution ... informed by the logic of green capitalism".
"We cannot reward national governments for hectares of forest preserved without demanding they adopt decisive measures to limit and reverse the irrational expansion of soy, oil-palm and sugar-cane monocultures," it said, referring to the lack of strings attached to payments.
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Rival rainforest funds
Meanwhile on Thursday France announced an initiative to protect forests in DR Congo.
Backed by Germany, Norway, Belgium and the UK, "The Belem Call to Action for the Congo Basin Forests" aims to mobilise resources to help countries protect the second-largest rainforest in the world.
"Donors are committed to raising more than $2.5 billion over the next five years, in addition to the domestic resources that will be mobilised by countries of central Africa to support the protection and sustainable management of the Congo Basin forests," the Elysée presidency said in its statement.
There are concerns the French-led conservation scheme could steal TFFF's thunder.
"In theory, both initiatives are very different," a diplomat familiar with both proposals told Reuters, noting that the TFFF would offer annual payments to rainforest nations with no strings attached. Still, the optics of two rival rainforest funds may be unhelpful, the source added.
