− New international agreements seek to protect tropical rainforests
− Green financing remains popular following Covid-19 pandemic-era boom
− Private actors and technologies augment conservation efforts
− Communal ownership is emerging as model for sustainable development
In the fight against climate change, forests are vital carbon sinks, absorbing twice as much carbon as they produce each year globally. Tropical rainforests play a particularly vital role, storing an estimated 25% of the world’s terrestrial carbon.
Public and private sector actors are increasingly collaborating to protect these areas, which are mostly located in emerging markets, through green bonds that foster sustainable development in sectors such as agriculture, energy and technology.
Against the backdrop of the COP27 UN Conference on Climate Change in Sharm El Sheikh, Egypt, Brazil, Indonesia and the Democratic Republic of the Congo (DRC) are in talks to form a strategic conservation alliance, nicknamed the “OPEC for rainforests”. The three countries are home to approximately 52% of the world’s remaining primary tropical rainforests.
The alliance could oversee proposals on carbon credits and green finance – as debt-for-nature swaps become more common worldwide – and expand to include other rainforest countries, such as Peru and Cambodia.
Last year, at COP26 in Glasgow, Scotland, the three countries signed an agreement to halt and reverse deforestation by 2030.
Colombia is also preparing to announce a bloc of Amazon countries focused on forest conservation, with proposals to dedicate 100% of carbon tax income to the rehabilitation of ecosystems, in combination with an annual international contribution of around $400m.
These announcements follow the October 30 victory of Luiz Inácio Lula da Silva in Brazil’s run-off presidential elections. The president-elect has made conserving the Amazon a central campaign promise, after illegal mining and logging activity during the presidency of his predecessor, Jair Bolsonaro, saw deforestation reach a 15-year high in 2022.
Mobilising green finance
As countries work to reduce greenhouse gas emissions in line with the Paris Agreement, new financing instruments such as green bonds have become key in helping emerging markets develop sustainably.
Green financing has been used to ease the transition to sustainable forms of energy, while some initiatives are geared towards protecting key ecosystems.
For instance, the Seychelles pioneered blue bonds in 2018 in order to protect the island nation’s marine resources. The system of carbon credits allows companies to fund the preservation and sustainable development of rainforests and offset their emissions at the same time.
Last week Brazil’s Supreme Federal Court reactivated the Amazon Fund, the largest ever created for the preservation of forests. Valued at more than BRL3bn ($573m), the fund had been inactive for almost four years.
In December 2017 Nigeria became the first African country and the fourth globally to utilise a debt instrument for financing a climate-friendly project. Approximately N2bn ($4.5m) out of the total N10.7bn ($24m) was earmarked for afforestation projects, with an additional N1.2bn ($2.7m) contributed from a follow-up bond issued in June 2019.
While the project has faced challenges, at COP15 of the UN Convention to Combat Desertification in May 2022, Nigeria’s President Muhammadu Buhari announced that more than 6m ha of land had been forested, a major step toward the country’s pledge to forest 25% of its area in line with global best practices.
A recent study from the National University of Singapore’s Centre for Nature-based Climate Solutions found that 58% of forests under threat in South-east Asia could be protected via carbon credit schemes. The centre is currently collaborating with a forestry company in Indonesia to monitor the ability of tropical peatlands to capture and store carbon.
One standout example in the field of green bonds is Gabon. The Central African country is prepared to launch carbon credits geared at protecting its rainforests, which cover 88% of its territory. A vocal proponent of debt-for-nature swaps, Africa’s seventh-largest oil producer is harnessing them to offset carbon emissions at home and abroad while creating jobs for citizens.
In October 2022 the country announced its plan to sell sub-Saharan Africa’s largest green bond to date − worth between $100m and $200m – to fund the construction of hydropower plants.
Increasing engagement from local communities and entrepreneurs has had notable success in combatting forest degradation.
For instance, no-deforestation commitments are helping create more sustainable supply chains for palm oil, a major driver of deforestation in South-east Asia. A recent study by palm oil supply chain-mapping initiative Trase found that forest clearing for palm oil production has fallen by 82% over the past decade, despite an ongoing rise in prices.
Meanwhile, in April of this year the government of the DRC produced a report on its logging industry, the first step to unlocking $500m in climate funds.
The Central African country, home to some 314m ha of primary tropical forest, has experimented with initiatives in which local communities are tasked with stewardship and leading the sustainable development of tracts of rainforest. A 2019 survey of community concessions found that deforestation in those areas was 23% lower than the national average and 46% lower than in logging concessions.
In Gabon, drones and satellite imagery are used to monitor forests and protect wildlife, such as the critically endangered African forest elephant, from poaching and habitat loss.
Additionally, some companies are pioneering ways to mobilise consumer interest in protecting the world’s remaining rainforests.
In March of this year the Brazilian subsidiary of Portuguese-based Nemus, which owns 410 sq km of Amazon rainforest, began selling non-fungible tokens (NFTs) to fund preservation, reforestation and sustainable development. Rather than owning the land, buyers of the NFTs sponsor tracts of various sizes, receiving information such as satellite imagery to document preservation efforts.
US-based biotech company C16 Biosciences recently launched Palmless, a palm oil alternative made from yeast. The product seeks to replace an industry that is seen as responsible for significant deforestation in Malaysia and Indonesia, producing a reported 500m tonnes of CO2 equivalent annually, according to a 2018 report from the International Council on Clean Transportation.