Amazon, Boston Consulting, McKinsey, Unilever, Salesforce, Airbnb, GSK, and Nestlé in April threw their weight behind a $1bn scheme aimed at tackling deforestation that now faces the challenge of establishing which countries will receive funds.
The Lowering Emissions by Accelerating Forest Finance (Leaf) venture was launched just as new data showed greenhouse gas emissions from the loss of previously untouched tropical forests had exceeded the combined emissions from Europe’s five-largest economies.
Under the proposed scheme, companies would in effect pay countries such as Brazil, Indonesia and the Democratic Republic of Congo for carbon credits linked to the avoidance of deforestation.
The organisations can then use those credits to compensate for their own emissions. Since trees absorb carbon, cutting them down counts as a source of emissions.
Leaf has proposed voluntary contributions of at least $10 per tonne of CO2 emissions avoided, or almost double what is presently offered in the voluntary carbon market.
“We’ve announced the call for proposals of $1bn — 100m tonnes at $10 per tonne. But that’s just the beginning. We know that that’s not enough,” said Eron Bloomgarden, executive director of Emergent, a US-based non-profit that will facilitate the transactions.
Globally, more than 4.2m hectares of humid primary tropical forest, or an area similar to the size of Switzerland, were lost in 2020, mainly to agriculture, commodity production and wildfires.
An equivalent of 2.65bn tonnes of CO2 were released into the Earth’s atmosphere as a result, according to data from the World Resources Institute’s Global Forest Watch, based on the estimates of carbon stored in the destroyed vegetation and root structures.
Humid tropical forest loss rose 12 per cent in 2020, despite the global economic slowdown brought on by the pandemic. It also flew in the face of commitments by large multinationals to prevent deforestation in their supply chains caused by the production of soy, palm oil, timber and beef.
Primary tropical forests are particularly important since they are not fully recoverable, and can take centuries to regenerate. Their removal results in a huge loss of biodiversity.
Elizabeth Dow Goldman, GIS research manager for Global Forest Watch, said: “We were all hoping  would be the year where things turned around. Yet [primary forest loss] went up . . . it’s disappointing to see that.”
“Across the tropics, agriculture is such a big driver of primary forest loss,” said Goldman. Being intentional about how and where agriculture expanded could have a big impact, she added. “There needs to be a focus on improving output from the land that’s already under cultivation.”
Under Leaf’s scheme, Brazil could theoretically receive about $1bn if its deforestation of primary tropical forests were reduced by just 10 per cent.
But there are many other countries seeking financial support, where the effect would also shift their economies.
Malaysia is one of only four countries where forests emitted more carbon than was captured over the past two decades, turning them into a carbon source from a typical carbon “sink”. In the period from 2001 to 2020, close to 17 per cent of Malaysia’s tropical primary forests were lost, mainly to palm oil plantations and timber trade.
Yet Malaysia has managed to reduce deforestation for each of the past four years after bringing in caps on palm plantation areas and harsher punishments for illegal logging. Humid primary forest loss reduced from 185,000 hectares in 2016 to 73,000 hectares in 2020, GFW figures show.
If Malaysia reduced its deforestation rate of primary tropical forests by a further 10 per cent from current rates, in theory Leaf’s voluntary carbon credit scheme, if scaled, could provide about $60m in financial support.
In the Democratic Republic of Congo, deforestation is mostly caused by agricultural demands as smallholder farmers clear space to grow staple foods such as cassava and maize, for an increasing population.
A study by the University of Maryland found that more than 90 per cent of overall tree cover loss in the Democratic Republic of Congo was because of “slash and burn” agricultural techniques where forest land is burnt for cultivation and then left to regenerate. Deforestation in the DRC has resulted in about 480,000 hectares of primary humid tropical forest being lost each year, over the past five years.
If deforestation rates in DRC for humid primary tropical forests alone were reduced by just 10 per cent, its jurisdiction could receive almost $350m from Leaf’s scheme.
Credits linked to avoided deforestation are not new and have caused controversy: critics have said it is difficult to ensure that the protection of one area does not lead to deforestation in another. Also, some “avoided deforestation” credits are generated from schemes in areas of woodland that were not genuinely at risk of being cut down.
Under the Leaf plan, tropical forest countries would not receive financing until a third party had checked that deforestation was reduced across the “jurisdiction” — the nation, state or province.
Leaf advocates argue that the jurisdictional approach will avoid protecting one area while deforestation shifts next door, creating “islands of green”.
Emissions-reduction purchase agreements are expected to be signed with tropical countries by the end of the year, but countries will not start receiving financing until the projects have begun generating credits.
“These countries need to find the right equilibrium between forest protection . . . and food production,” said Emergent’s Bloomgarden.
The scheme is underwritten by the governments of the UK, US and Norway.
“Protecting tropical forests is really a global imperative,” said Ruben Lebowski, chief natural resource economist at the Environmental Defense Fund, a US non-profit environmental advocacy group. “There’s no pathway to meeting the Paris targets without rapidly reducing deforestation. It’s mission critical,” he added.
“Right now, the economic development model only puts a value on trees when they are cut down,” Lebowski said. “Leaf aims to create durable finance for a model that is consistent with standing forests and sustainable livelihoods for indigenous and local communities.”
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Additional reporting Billy Nauman and Camilla Hogdson