Among the three largest tropical rainforests globally, only the Congo Basin has remained a strong net carbon sink, absorbing about 0.61 GtCO2e each year (approximately equivalent to Canada’s total GHG emissions annually).  

Although relatively undisturbed compared to other tropical forests, the Congo Basin is at significant risk today, with deforestation and forest degradation increasing quickly. These trends call for protective measures.

Congo Basin countries need to strike a balance between economic growth and natural resource conservation. Additionally, governance and public debt challenges hinder the implementation of regulations or green investments that could protect these forests. 

While several efforts to scale up green finance for forest conservation exist, finance has been largely insufficient to date and does not reflect the ecosystem and climate services it provides. 

Key messages   

This discussion paper, Increasing International Finance Flow to Sustain the Congo Basin’s Forests, proposes six strategies to mobilize public and private finance for sustainable development and forest conservation tailored to the Congo Basin’s characteristics, needs, and priorities:

1. Scaling public finance: Establishing a sustainable forest trust for the Congo Basin. 
2. Increasing fiscal space in Congo Basin countries: Assigning value to the Congo Basin’s natural assets to encourage long-term investments. 
3. Stimulating investments in conservation: Issuing a forest bond linked to new ecosystem payments. 
4. De-risking private investment: Enhancing the use of guarantees in the context of climate finance and green growth. 
5. Investing in pipeline development: Creating an investment and technical assistance facility for environmental markets. 
6. Attracting foreign direct investment: Establishing environmental markets investment promotion agencies in the countries of the Congo Basin. 

Climate Focus developed this discussion paper in collaboration with WWF and the Commission des Forêts d’Afrique Centrale (COMIFAC).  

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The United Nations Development Program (UNDP) defines carbon markets as trading systems in which carbon credits are sold and bought. Companies or individuals can use carbon markets to compensate for their greenhouse gas emissions by purchasing carbon credits from entities that remove or reduce greenhouse gas emissions.

One tradable carbon credit equals one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas reduced, sequestered or avoided. When a credit is used to reduce, sequester, or avoid emissions, it becomes an offset and is no longer tradable.

The challenge

While carbon markets have the potential to reduce emissions and support a low-carbon transition, they face criticism for issues like questionable carbon offset projects, carbon leakage, market manipulation, transparency, pricing, and the potential impact on community land tenure rights. As global demand for voluntary carbon credits continues to grow, there is an urgent need to address these risks and protect the rights of local communities.

Securing Land Tenure in Carbon Markets: TMG’s efforts

TMG Research, at the Africa Climate Summit, emphasized the critical importance of safeguarding land tenure rights in carbon markets, particularly for women and in regions like Africa where land rights are at risk.

TMG is committed to tackling the risks that carbon markets pose to communities lacking tenure rights and aims to foster their active engagement in these markets.In this white paper, we explore prominent risks and strategies to empower communities as active participants in carbon markets. We aim to help them contribute to market management and reap benefits. This is achieved through four reflections:

1. Land Tenure and Carbon Markets: Insecure land tenure in Africa risks rural livelihoods, carbon projects lack safeguards, impacting communities.
2. Environmental Challenges in Carbon Offsets: Afforestation can harm biodiversity and ecosystems, carbon offset projects have concerns like leakage and permanence.
3. Overstated Carbon Reductions in Forest Offsets: Forest offset projects exaggerate carbon savings, the credibility of carbon credits is in question.
4. Questioning Carbon Credits: Carbon credits’ impact on emissions reduction is debated; Concerns about transparency and moral licensing; A reassessment of carbon market frameworks is needed to protect land rights and ensure moral legitimacy.

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About the 6th GLF Investment Case Symposium

Hosted in Luxembourg and online, GLF–Luxembourg Finance for Nature 2023: What comes next? united 4,500 participants from 160 countries around how finance can solve – rather than exacerbate – the climate and biodiversity crises. The event featured 106 speakers and 100 global and local partner organizations and reached 10 million people on social media, with more than 230,000 engagements.

About this session

This session presents two investment cases from Colombia and Mongolia that have taken steps towards developing partnerships with the commercial sector, investors, and value chain actors to harness finance for rangeland protection and restoration through sustainable low-emission livestock value chains.

These cases highlight the importance of a collaborative approach to such investment opportunities, bringing together producers, research organizations, NGOs, the commercial sector, and climate financers. The session is a collaboration between the CGIAR initiatives on Livestock and Climate and Climate Resilience, the Sustainable Fibre Alliance, Hacienda San Jose Colombia, and the CGIAR Hub for Sustainable Finance.

Resources

Presentation: Sustainable Fibre Alliance

Presentation: Sustainable grass-fed tropical beef production

Publication: Carbon footprint and mitigation scenarios for Hacienda San Jose: Identifying opportunities and challenges using a consolidated modelling framework

Publication: Sistemas innovadores de siembra de Urochloa humidicola mediante estolones: Un caso exitoso en la altillanura colombiana

Video: Meet the Herders

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The ACORN approach

Acorn (Agroforestry CRUs for the Organic Restoration of Nature) is a Rabobank initiative. Its aim is to increase the accessibility of the international carbon market for smallholder farmers in the developing world. By utilizing its unique position and strong connections in the food and agri-sector, Rabobank is activating change by encouraging smallholder farmers to transform their agricultural practices into more sustainable ones.

Through the ACORN platform, a unique collaboration between Rabobank, Microsoft and Solidaridad Network, farmers are now able to sell the carbon emissions stored on the trees on their land. ACORN is a breakthrough for smallholder providers of carbon removal units. For companies, it is the first global platform to buy carbon emissions from smallholders to reach net-zero emission targets.

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Accelerating action to reduce Scope 3 emissions

The world’s food systems urgently need to be reset. Our current systems encroach on the land – particularly forests. This session focuses on three commodities that drive forest loss: beef, soy, and palm oil. It will look at how we can best accelerate action to reduce Scope 3 emissions, where deforestation features so prominently.

A moderated dialogue will bring forth key interventions we can take to identify, manage and reduce these “last mile” emissions, essential to achieving a net zero world. This session is hosted by the Food Systems, Land Use, and Restoration Impact Program (FOLUR).

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Sustainable Finance For Nature-based Solutions Digital Forum

On March 2022, the Luxembourg-GLF Finance for Nature platform hosted the Sustainable finance for NbS Digital Forum with the aim of bringing together practitioners, policymakers, and scientists to explore opportunities for NbS investments emerging from recent developments in carbon finance and sustainable finance regulations, as well as build dialogue to increase the adoption of good practices, and inform policy processes in this arena.

In this panel discussion, experts explore prospects for carbon markets in these sectors, opportunities for local carbon markets in the Global South, and how to transform corporate net-zero commitments into new sources of financing.

Carbon finance and its potential to boost sustainable land use

Forests and sustainable land use are key in the fight against climate change. However, carbon finance remains largely focused on forests, while other land use sectors, such as agroforestry, still struggle to attract financing. Panel experts help us unpack opportunities for local carbon markets:

• Carbon markets can play a major role in financing NbS. The trading of emission allowances encourages companies and countries to reduce their carbon footprints. Credits are generated from projects, such as solar farms or forest conservation, and from government cap-and-trade schemes that put a price on emissions caused by major polluters.
• Sellers in the carbon market create carbon credits by reducing their emissions, such as a farmer who adopts sustainable land-use practices. The credits are then listed on a registry and sold, generating income for the sellers, which are often farmers and local communities. Buyers, usually corporations or governments, gain the right to emit a set amount of carbon dioxide per credit that they buy at a market price.
• Carbon markets can boost financing beyond forests to include other land-use sectors, and how these markets provide opportunities for farmers in the Global South to participate at the local level. Making sure farmers and local communities get access to finance is key in boosting sustainable land use. 

Learn How carbon markets supercharge nature-based solutions to climate change

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About the Sustainable Finance For Nature-based Solutions

Carbon markets and sustainable finance taxonomy are two rapidly growing market mechanisms that promise a surge in climate finance and a simultaneous decline in greenhouse gas emissions.

Luxembourg has pledged to achieve carbon neutrality by 2050. Here’s how it plans to fund the transition, according to the Grand Duchy’s Minister for the Environment, Climate and Sustainable Development, Carole Dieschbourg.

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GLF Amazonia 2021: As it happened

About Robert Nasi

Robert Nasi, CIFOR-ICRAF Managing Director and CIFOR Director General, explains the interconnectedness of the social and environmental tipping points and proposes a way to alleviate the risks that we are facing.

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Presented by Cecilia Sundberg, Associate Professor of Bioenergy Systems at the Swedish University of Agricultural Sciences (SLU), during GIZ’s session, “Biochar and Its Practical Application to Restore Degraded Lands“, at GLF Africa 2021.

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