Brazilian President Luiz Inácio Lula da Silva has unveiled an unprecedented global facility to protect tropical forests, obtaining commitments worth several billion dollars from both wealthy and developing nations at the COP30 climate summit.

The Tropical Forest Forever Facility heralds a fundamental transformation in how conservation is financed, seeking to mobilise $125bn through a hybrid structure that combines government capital with private investment to incentivise countries to preserve rather than destroy forest cover.

The launch comes as the UN climate conference, running from November 10-21 in the Amazon city of Belém, faces a credibility test amid geopolitical turbulence and growing scepticism about climate negotiations and multilateralism.

"For the first time in history, countries of the Global South will take a leading role in a forest agenda," Lula da Silva told leaders from more than 30 nations at the launch event on November 6. "In just a few years, we will begin to see the fruits of this fund."

The Brazilian president has positioned the forest fund as a centrepiece of what he calls a "COP of implementation", deliberately staging the summit in the Amazon so the world could "see the region's reality.”

By November 7, Norway had emerged as the largest contributor to the TFFF, pledging $3bn over the next decade subject to specific conditions. Brazil and Indonesia each reconfirmed commitments of $1bn, whilst France indicated it would consider contributing up to €500mn until 2030 under certain conditions. Portugal committed $1mn, with the Netherlands pledging $5mn specifically for the facility's secretariat.

“We really need to go from reducing deforestation to permanently protecting the tropical rainforests,” Andreas Bjelland Eriksen, Norway's environment minister, told CBC News.

“The idea behind the TFFF is to create a permanent revenue stream, making it more profitable to allow forests to stand rather than to cut them down.”

Germany, represented at the summit, fully endorsed the initiative, with Chancellor Friedrich Merz expected to discuss financial commitments with Lula da Silva at a later date.

"We will contribute significantly to this initiative's success," Merz said. "To achieve our climate goals, the tropical forest must be preserved while more private sector funding is mobilised. This can only succeed together with our partners in the Global South and North.”

The launch declaration received endorsements from 53 countries, including 19 potential sovereign investors. Critically, 34 tropical forest nations — covering more than 90% of developing countries' tropical forests — backed the facility, including Indonesia, the Democratic Republic of Congo and China.

The mechanism addresses what Brazilian officials describe as a fundamental flaw in how global markets value forests: economic incentives currently favour clearance over conservation. By establishing permanent financial rewards for preservation, the facility seeks to reverse the logic that drives deforestation.

"This unprecedented innovation in international financial architecture will bring together sovereign and private capital in a robust, long-term mechanism," said Fernando Haddad, Brazil's finance minister, who spearheaded the initiative's development.

The facility's architecture represents a departure from traditional climate finance. Rather than seeking donations, Brazil is requesting investments designed to be repaid over time. The blueprint calls for $25bn in initial capital from governments, which would then be leveraged at a four-to-one ratio to attract $100bn from institutional investors such as pension and sovereign wealth funds.

These resources would be invested in bonds, with annual returns distributed to tropical forest nations that keep deforestation rates below 0.5%, verified through satellite monitoring. At full capitalisation, the facility is projected to generate approximately $4bn annually for conservation efforts.

For Brazil, home to the world's largest tropical forests, this would amount to 26 times the country's current receipts from the Amazon Fund, according to finance ministry calculations.

The facility incorporates several distinctive features aimed at addressing historical shortcomings in forest finance. Most significantly, at least 20% of payments must flow directly to indigenous peoples and local communities, who are widely recognised as effective forest stewards.

"The TFFF boldly and justly acknowledges the essential role of indigenous peoples and traditional communities in forest protection," said Sonia Guajajara, Brazil's minister of indigenous peoples, according to the COP30 press office. "Ensuring that at least 20 % of resources go directly to these guardians is a historic achievement."

The initiative also requires that its investment portfolio exclude assets that cause deforestation or greenhouse gas emissions, including coal, peat, oil or gas activities.

Mauro Vieira, Brazil's foreign minister, pointed to the facility's governance arrangements, noting that forest and sponsor countries would participate on equal terms, in a shift from traditional donor-recipient dynamics.

The World Bank has agreed to serve as trustee and interim host of the facility. Subsequent steps include establishing the Tropical Forest Investment Fund in a national jurisdiction, clearing the path for operations to commence.

However, the plan faces considerable obstacles. The United States, which participated in drafting the plans during the Biden administration, has stopped engagement under President Donald Trump, who has started proceedings to pull out of the Paris Agreement after taking office in January. The UK government has stated it will not contribute public funds at this stage, though it backs the initiative in principle.

And critics have raised concerns about the facility's dependence on bond market performance, which could prove volatile during economic downturns. Paulo de Resende, Brazil’s undersecretary for fiscal and economic affairs, conceded that returns might be insufficient for payments during severe market disruptions, similar to those experienced during the 2008-09 financial crisis or 2020 pandemic, according to The Guardian.

Nevertheless, he said risks had been thoroughly evaluated by the finance ministry, consultants, the World Bank and advisers across multiple countries. The four-to-one leverage ratio is conservative compared with international financial institutions, he noted, and the fund would invest in national and corporate bonds rather than equities, with no more than a 4% holding in any single asset.

"If TFFF is responsible for a 20% reduction in deforestation, then we repay the money in one year," de Resende said, as quoted by The Guardian, noting that 6mn hectares of tropical forest are lost annually, equivalent to 1.8bn tonnes of carbon dioxide. "It is a small risk with an enormous return."

The UN estimates that forest protection and restoration requires mobilising more than $66.7bn annually. The TFFF is designed to complement existing instruments whilst addressing what officials characterise as a critical gap in environmental finance.

Brazil aims to secure approximately $10bn in the fund's first year, with discussions continuing towards the medium-term target of $125bn. Ultimately, the initiative's success will hinge not so much on immediate commitments as on whether it can generate momentum for broader participation from governments and financial institutions that have historically channelled capital towards activities driving deforestation.