The Climate Policy Initiative (CPI), a climate finance and policy NGO, will launch a financing mechanism to restore forests during the UN Cop 30 climate summit next month, executive director Julio Assuncao said.
The mechanism — dubbed RDM and developed by CPI in partnership with Brazilian university PUC-Rio — is a financial framework in which governments, multilateral institutions and companies would buy carbon credits from countries with tropical forests, who in turn would be paid for every metric tonne (t) of carbon removed from restored areas.
It was developed in response to a request from Cop 30 president Andre Correa do Lago, who asked economists to draw up new climate finance mechanisms. It also draws on a gap found by RDM's founders, Assuncao said.
"We already have REDD+ to combat deforestation and the Tropical Forests Forever Facility (TFFF) to [reward countries for keeping their forests]," Assuncao said. "But we saw a gap in these large-scale mechanisms regarding forest restoration".
There are almost 1.3bn hectares (ha) (13mn km²) of tropical and sub-tropical forests in 91 countries across the world, which stock a combined 600bn t of CO2, Assuncao said. But the world has lost 180mn ha such forests ince 2001, he added. Restoring that area would allow the world to capture almost 50bn metric tonnes of CO2, he said.
"If we implement RDM at $50/t of CO2, we can find 175mn ha where the return value would be higher than $5,000/ha," he said. "With that, we could capture 2bn t of CO2/yr in the first five years," he added.
Assuncao calculates that the mechanism can generate up to $100bn/yr for countries with tropical forests. The CPI further estimates that it can generate $738bn in 30 years.
But there are still some challenges for the mechanism to be a success. "It is fundamental that we develop a global carbon accounting system that can be implemented cheaply and is available to everyone", he said. Additionally, RDM will not take off unless "the world is truly interested in mitigating climate change".
Having Brazil host Cop 30 was "fundamental" to RDM's creation, as "Brazil is like the Michael Phelps of the forest agenda," Assuncao said — hinting at the sheer size of Brazil's forest areas. And the world is gradually increasing the importance of forests in climate talks because the biome can bring concrete results to climate finance, rather than other mechanisms usually discussed at climate summits that bring a "somewhat abstract capital mobilization", he added.
Brazil can benefit from RDM not only through its Amazon forest — which could capture up to 26bn t of CO2 by restoring its degraded area, CPI says — but also from biomes such as the Pantanal, a tropical wetland in Brazil, and the Atlantic forest, a moist broadleaf biome, Assuncao said.
