The TFFF is designed as a blended-finance mechanism to shift incentives from deforestation to forest preservation.
The investment would be made through a loan, subject to finalising the facility’s governance and operational arrangements, completing due diligence and meeting the Government’s conditions.
The Government said the use of a loan, rather than a grant, allows the investment to be funded through a different financial transaction budget.
The decision follows the Government’s recent announcement that it would reprioritise climate finance funding to support a cap on single bus fares at £2 as part of measures to address the cost of living.
Under the TFFF model, tropical forest countries receiving payments would not be responsible for repaying the UK funding.
How the facility would work
The TFFF is designed as a blended-finance mechanism that would pay countries based on the amount of tropical forest they conserve and the amount of degraded land they prevent from being lost.
At least 20% of the funds are intended for Indigenous Peoples and local communities. Countries would need to meet eligibility requirements, including verified reductions in deforestation, monitoring capacity and policies to protect forests and support local communities.
The facility differs from conventional carbon market schemes by measuring forest protection rather than relying solely on emissions reductions. Its proposed approach is intended to address issues including additionality, leakage and permanence while recognising the wider benefits of forests for biodiversity, water regulation and carbon storage.
Public capital would be used to generate payments to participating countries, with private investment expected to increase the amount of funding available.
Brazil has pledged $1bn to the initiative. The facility aims to raise $25bn in public and philanthropic finance and use that funding to attract a further $100bn from private investors, for a total target of about $125bn.
UK seeks oversight role
The UK investment remains subject to further due diligence covering the facility’s final size, crediting arrangements, structure and loan terms.
As a condition of its investment, the UK Government is seeking participation in relevant fund oversight mechanisms. This would give the UK a role in monitoring the investment and working with other participating countries on the facility’s priorities and governance.
Edward Davey, head of WRI Europe’s UK Office: “The UK’s investment is an important vote of confidence in a new model for protecting the world’s tropical forests. Their fate is not only vital for global biodiversity and climate stability, but also for the UK’s and the world’s economic resilience.
“The wildfires, heatwaves and droughts that have wreaked havoc on Europe’s communities this year — and the catastrophic floods in Nepal — are profoundly intertwined with the health of the forests stretching across the Amazon, Congo Basin, Southeast Asia and beyond.
“If those forests fall, we all feel the impacts — through ever more severe climate-driven disasters and food insecurity. But if those forests thrive, we all feel the benefits too — through a more resilient economy and a more secure global food system.”
Tanya Steele, chief executive at WWF, said: “We welcome the commitments made by the UK Government to tackle the global deforestation crisis. The rapid destruction of the world’s forests is fuelling climate change now, with consequences already being felt here in the UK and around the globe.
“By backing the Tropical Forest Forever Facility, the UK is helping to incentivise nations for keeping their forests standing.”
