Brazil's President Luiz Inacio Lula da Silva next to a Samauma tree ahead of the COP30 UN Climate Summit, on Nov. 5, in Belem, Brazil.Eraldo Peres/The Associated Press
Brazil’s President, Luiz Inácio Lula da Silva, did not cover himself in green-tinged glory as his country on Monday launched the COP30 climate change conference in Bélem, in the rainforest country’s northeast. Just days before calling for the end of the dependence on fossil fuels, his government approved studies on oil exploration at the mouth of the Amazon. He also must decide within a week whether to veto a bill that extends coal production subsidies. It could go either way.
With his credibility as a climate leader in jeopardy, Mr. Lula must be praying that his Tropical Forest Forever Facility (TFFF) gains traction in Bélem. It might. It’s a novel initiative that essentially financializes nature – a bond-backed bet that rain forests are worth more alive than dead.
In the era of U.S. President Donald Trump, who called climate change a “con job” at the UN General Assembly in September, and who is not sending a high-level U.S. team to Bélem, expectations for a breakthrough at COP30 are exceedingly low.
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Since the first COP (Conference of the Parties) in Berlin in 1995, planet-warming carbon dioxide emissions have gone one way – up – and hit an all-time high in 2024, according to the International Energy Agency. Atmosphere CO2 concentrations were 422.5 parts per million, which is 50 per cent higher than preindustrial levels. At this rate of increase, chances that global warming will be limited to 1.5 degrees C – the goal set at COP21 in Paris in 2015 – seems a fantasy; highly dangerous 2-degree warming, or greater, seems more likely.
Forest loss is a big part of the problem. Tropical rain forests in particular act as the Earth’s thermostat by storing vast amounts of carbon. They protect and spawn huge numbers of plant and animal species, some of which have yet to be catalogued, and regulate rainfall. The fires used to clear the forests contribute to global warming.
The Global Forest Review, published by the World Resources Institute, says that the amount of forest lost in 2024 (trackable by satellite and drones) came to 6.7 million hectares, or 26,000 square miles. That’s the size of Ireland or Sri Lanka. For each of the previous six years, the loss was close to four million hectares.
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The quest for profits helps to drive forestry loss. Healthy, thick, road-free forests full of wildlife produce no income. The same land used for cattle grazing, palm oil or cocoa production, nickel and copper mines and smelters, or logging does. Banks provide the financing; the loans are paid back from the profits of the business built on the former forest.
Brazil is not the only country where forest cover is vanishing with cruel speed. Indonesia, the world’s biggest producer of nickel, a crucial component for electric vehicle batteries, lost 32 million hectares of tree cover between 2001 and 2024, equivalent to 20 per cent of its cover in 2000, says Global Forest Watch.
The idea behind TFFF is to fight business with business. If a public or private land owner can make a return on a forest by leaving it intact, everyone wins, especially the planet. TFFF has been in the works for years and has become Mr. Lula’s pet project, one that he wants to make the cornerstone of COP30.
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The idea is to convince countries to contribute US$25-billion in capital that can be levered up to US$125-billion by issuing US$100-billion in senior debt to private investors. The capital would be invested in high-yield bonds. The returns on the portfolio over the cost of the capital would be used to pay countries that preserve their rain forests. Some 74 countries would qualify. The World Bank has agreed to oversee the scheme.
Once the plan is fully funded, the payments would amount to US$4 per hectare per year for countries with low deforestation rates. The more standing rainforest you have, the greater the payments, and vice-versa. About 20 per cent of the payments would go to local and Indigenous communities, who have the most to gain by preserving their habitats.
So far, so good. Norway has backed the fund with a US$3-billion contribution over 10 years. Brazil and Indonesia have pledged US$1-billion each, and France has stumped up US$500-million. Other countries are bound to write cheques.
The concept is risky. Years could pass before the fund reaches critical mass, delaying its effectiveness. If the bond portfolio has a bad year on the markets, the payments would fall. The touted US$4 payment rate may not be enough to protect much land. Ranchers in the Brazilian Amazon can earn much more. And the very idea of outsourcing forest preservation to a bond portfolio may put some environmental groups off the idea. If they are highly critical of the program, potential funders may back off.
But the truth is that no forest preservation plan so far has succeeded in stopping mass deforestation, though policing efforts in some countries have slowed illegal rainforest destruction. Direct payments to landowners to keep their trees standing also has had some success. The TFFF is a new approach that borrows on capitalist thinking. In the absence of anything more clever, it is worth giving TFFF a shot.