Conservatives raise concern about PM Støre’s mega-pledge to Brazilian forest fund

“This appears to be a risky and unnecessarily complex transaction, which in the worst case will cause Norway great losses without any funding for the conservation of the rainforest,” Astrup says to Development Today.

The Tropical Forest Forever Facility (TFFF), which aims to raise USD 25 billion in junior capital from sponsors and a further USD 100 billion from private investors, was launched by the Brazilian government at the opening of COP30 last month. The idea is to create a long-term, predictable source of funding for tropical forest conservation from returns on investments. PM Jonas Gahr Støre announced in Belém a pledge of up to USD 3 billion (NOK 30 billion) in loans to TFFF over the coming ten years, making Norway by far the largest sponsor so far.

Half of these funds – up to NOK 1.5 billion annually – will come from the budget of Norway’s aid-financed rainforest programme, which now stands at NOK 4 billion per year.

The TFFF pledge marks the most significant shift in strategy for the rainforest programme, which has enjoyed broad parliamentary support and backing from both Labour and Conservative-led governments over the last 15 years.

One of the conditions that the Norwegian government has set for its TFFF pledge is that it must receive parliamentary approval. Astrup says his party will follow this process closely.

“The Prime Minister must present the case to Parliament before Norway can participate in such a programme. The Conservative Party will then thoroughly investigate the case and ask questions,” Astrup says.

As reported earlier, the Climate Ministry sought financial advice from Pareto Securities this spring regarding its considerations about possible support to TFFF. The consultant reported in June that the fund had a “robust financial structure,” but warned that its success depended on having the World Bank be its Treasury Manager, which would ensure governance quality and preferential creditor treatment, and having a AAA credit rating. Neither of these two conditions appears to be in place.

A number of economists, including Arild Angelsen of NMBU and Bård Harstad of Stanford, UK financier Michael Liebreich, Max Matthey of Climate Impact Auctions and Aidan Hollis of University of Calgary, have argued that there are enormous risks with the hedging structure of the TFFF and that market volatility could wipe out the junior capital leaving no money left for tropical forest countries.

“I understand their sense of urgency and that it was important to rally support for TFFF before and at COP30, but I wonder if [the Norwegian Climate Ministry has] underestimated the weaknesses and the risk that if TFFF fails, the motivation to give for forest conservation can be weakened in years to come,” said Harstad, who was part of a group that advised the COP30 Presidency.

Astrup says he “expects the government to obtain and present advice from independent experts, since such large sums are involved.”

Climate Minister Andreas Bjelland Eriksen declined a request for interview about TFFF. Development Today submitted questions to the minister but has not yet received responses.