The climate finance market dedicated to forests must grow exponentially, from $2.3 billion (currently) to between $20 billion and $72 billion by 2030. That is according to a new Nature study, Targeting climate finance for global forests, which uses an economic model – the Global Timber Model – to calculate the level of investment needed to meet Nationally Determined Contributions (NDCs).
Led by Kemen Austin of The Nature Conservancy, the study reveals that global policymakers can achieve better bang for their buck by embracing a Global Coordination scenario, where the same level of finance is available but mitigation takes place where it is least costly. “This highlights potential cost savings from increasing mitigation in regions with low-cost mitigation potential that is not reflected in current national commitments and informs the next generation of NDCs.”
“These findings provide valuable input for countries in the process of updating their NDCs under the Global Stocktake process of the Paris Agreement, which calls for both periodic strengthening of existing NDC commitments and commitment to future mitigation targets. In addition, “study informs strategies for scaling high-quality climate finance, including building on the commitment of $300 billion, agreed to at the 29th Conference of the Parties to the UNFCCC, to a target of $1.3 trillion by 2035 to support developing countries’ mitigation needs,” it said.
According to the study, China, Russia, Canada, and Oceania (which includes Australia and New Zealand) can achieve their forest-based NDC targets without the need for additional climate finance. “The forests in these regions were a net sink of CO2 in 2020, and GTM projects that the strength of this sink will increase through 2030 even in the absence of climate finance,” they said. “This trend is due to changes in land use and management, including future increases in global demand for timber. In response to these demand signals, Russia and Oceania are projected to intensify forest management, China to continue expanding forest area, and Canada to pursue both strategies.”
“Under the Global Coordination scenario, we project that Canada, Russia, China, Central America, and Oceania begin to take advantage of low-cost abatement opportunities that are not reflected in the first generation of their NDCs. Together, these five regions are projected to reach 0.3 Gt CO2 of mitigation in 2030, requiring finance (either domestic, international or both) of $5 billion annually.”
“We also project substantially more mitigation in Sub Saharan Africa under the Global Coordination scenario, reaching net mitigation of 1.2 Gt CO2 with climate finance of $21 billion annually in 2030, Brazil, reaching 0.9 Gt CO2 with climate finance of $16 Billion annually, and the rest of South America, reaching 0.5 Gt CO2 with climate finance of $9 Billion annually,” it said. “On the other hand, we project less mitigation in SE Asia, Japan, East Asia, Northern Africa and the Middle East, relative to these regions’ aggregate NDC commitments, due to the comparatively higher cost of mitigation in these regions”
According to the researchers, the study makes two important advancements: “First, we refine global scale analyses by estimating the distribution of finance needed to achieve regional forest-sector NDC targets. Overall, regions accounting for 70% of global forest carbon stocks can meet or exceed their forest-based NDC targets with carbon prices less than $100 / ton CO2. Yet, on a regional basis, we observe large differences in the costs of meeting NDC targets. Regions with low-cost mitigation potential beyond what is reflected in current NDCs—including large opportunities in Sub-Saharan Africa, South America, China, Russia, and Canada—are priorities for closing the gap between what has been pledged under NDCs and what is needed to reach emissions compatible with a 1.5 °C pathway. High-income countries in this group can lead by adopting more stringent emissions reduction targets and expanding domestic investments in abatement in the forest sector.”
“Next, this study identifies potential cost efficiencies in global forest-based mitigation by comparing mitigation achieved by meeting the upper-bound NDC target (1.9 Gt CO2) to mitigation achieved under a Global Coordination scenario (3.8 Gt CO2). We project that this two-fold difference in mitigation can be achieved at no additional cost, due to lower projected mitigation in regions with high-cost abatement (e.g., Northern Africa and the Middle East), and higher projected mitigation in regions with low-cost abatement (e.g., Sub Saharan Africa), under the Global Coordination scenario. This finding is consistent with previous studies showing that a theoretical global carbon market could result in mitigation nearly double current cross-sectoral NDCs without increasing total costs, compared to a scenario without an international market, as well as previous research demonstrating theoretical cost-savings via international mitigation transfers.”
Brazil’s Lula says international forest fund to be launched at COP30
The study comes after Brazilian President Luiz Inácio Lula da Silva last week revealed plans to launch an international fund to finance the protection of tropical forests at the next UN Climate Change Conference. The €125 billion fund is intended to reward countries with extensive rainforests for conservation projects.
Lula announced in Rio de Janeiro on the second and final day of a BRICS summit of major developing economies. The Brazilian leader said the forest fund would be a contribution to a just climate policy: “The Tropical Forests Forever Fund, which we will launch at COP30, will reward ecosystem services provided to the planet,” he said. “By protecting and restoring our territories, we are also creating opportunities for local communities and indigenous peoples.”
- To learn more about the Tropical Forests Forever Fund, click here for Wood Central’s special feature from COP28.
