Ukraine is unlikely to hand its forests to a private carbon-credit operator as Brazil has done, even as it studies the world’s first national forest-restoration concession for lessons that could shape its own post-war climate-finance market. That is according to Viktor Smal, head of Ukraine’s State Forest Resources Agency, in a commentary published by Interfax-Ukraine on the first government handover of forest restoration to a private company.
Brazil has done what few governments have dared to attempt, transferring the restoration of degraded territory to a private company that recoups its outlay by selling carbon credits on the global market. The arrangement folds an environmental obligation into a financial instrument, drawing private capital into a task long carried out by the state, whilst expanding a green credit market.
The deal that prompted his caution is Brazil’s award of a 40-year federal concession over roughly 145,000 acres of the Bom Futuro National Forest in the Amazon to restoration startup Re.green, the sole bidder at a Sao Paulo auction. Under the contract, the company will regenerate native vegetation and sell verified carbon credits, returning 0.7 per cent of revenue to the state, with annual proceeds estimated at near US$2 million, part of a national plan to restore some 30 million acres by 2030.
Whilst the case is certain to register as a signal for forestry administrations worldwide, Smal argues that copying it directly in Ukraine is unlikely to work. The country’s management system rests on a long professional foundation of inventory, protection and accounting that no private operator can yet match in expertise or infrastructure.
The appeal of handing restoration to private operators, he cautions, may flatter to deceive, since it can also expose weaknesses in the governance system itself. Repeated reports of illegal logging in the Amazon, on a scale visible from satellites, point to the kind of pressure that pushes a state towards alternative protection models.
For Smal, a functioning carbon-credit market cannot operate at scale without the accreditation, accounting, monitoring and verification systems that only the state or authorised institutions can guarantee. “Any forestry management model is not only about instruments, but also about institutions,” he said.
No international investor will engage an individual operator, he says, unless a transparent national framework stands behind it, which is why Ukraine’s priority is a comprehensive carbon-credit trading system rather than isolated projects. That work is already underway, with support from international partners, including the World Bank, to assemble the institutions needed to turn forestry into a source of climate finance.
The wider shift, as Smal reads it, is towards a common global target of holding warming to 1.5 degrees Celsius and reaching carbon neutrality by 2050, with forests treated as strategic assets rather than mere resources. Climate finance opens several practical avenues, he argues, for a country still counting the cost of war.
Amongst them is the rebuilding of forest ecosystems in territory scarred by fighting, with revenue from carbon certificates potentially directed towards demining. A second lies in preserving naturally regenerated forests on agricultural land, which Smal calls one of the country’s most underestimated resources.
Digitalisation offers a third path, with Ukraine already running a transparent timber-tracing system that Smal sees as a precondition for the investment that neutrality goal will demand. The Brazilian experiment signals that forests are entering the financial architecture of climate policy, but Ukraine’s task is to build its own model on institutional capacity rather than borrowed instruments — the only question, Smal says, being whether it prepares for a carbon-neutral 2050 systematically or not at all.
