Brazil will reach COP30in Belém, with about 20 proposals in negotiation. Among them, two economic initiatives are highlighted: the creation of Tropical forest (TFFF) and the formation of an international coalition to integrate carbon markets.
According to the Deputy Executive Secretary of the Finance and Coordinator of the Ecological Transformation Plan, Rafael Dubeuxbut only the adhesion of blocks willing to cooperate.
“If we have blockages in some areas, the countries that are willing to follow advancing do not need to be stopped because of it,” he said in an interview with CNN.
The TFFF is designed to create a permanent source of financing for tropical forests. The design provides for the mobilization of US $ 125 billion, with US $ 25 billion of initial contributions from countries, central banks or large investors,
The fund’s construction is being done on two fronts: sponsorship countries such as Norway, United Kingdom, Germany and France, and beneficiary countries such as Brazil, Colombia, Nigeria, Congo, Indonesia and Malaysia.
“Brazil has been leading this process, but it is really collective, with various events and hours of meetings,” said the secretary.
Fund logic is distinct from traditional donation mechanisms, as contributions will have compensation: countries or institutions applying resources will receive back capital with interest.
In this model, those who apply in the background will be similar to what they would receive in US Treasury titles, about 4% per year.
The funds will be applied to projects with higher profitability, between 7% and 8% annually, and the difference will be transferred to developing countries that preserve tropical forests.
The operation is based on the annual payment per hectare of forest held, estimated at about $ 4 per hectare. The mechanism also provides for bonuses for those who expand forest cover and penalties in case of loss.
“If he had 100 and the other year he kept 100, he receives the full value per hectare; if he went to 101, receives an additional. If there is relevant drop, he receives virtually zero,” explained Dubeux.
Tfff official documents detail that the deduction can reach $ 400 per hectare deforested and $ 100 per hectare degraded. If penalties exceed the amount receivable, there is no obligation to pay – a way to avoid risk of indebtedness to participating countries.
Dubeux also stated that the World Bank should take over the financial operation of the mechanism, which is still in the “maturation phase.”
The “mission” of the farm is that everything is ready for COP30 – which will be held from November 10 to 21 -, working and with the first contributions defined and deposited by the end of the year. Even so, Dubeux recognizes that reaching the maximum value may not happen in the short term.
“Some [países] Already signaled to us: ‘Look, we are interested in participating, but we can only put in the budget cycle one part next year and another now’. So you can’t dig, because it depends on others too, this process. But what is up to us is to leave the fund ready to work and make this engagement to receive these resources, ”he said.
Carbon coalition
Next to the bottom of tropical forests, the government bets on a new international carbon arrangement of European Carbon Border Adjustment Mechanism, but with distinct design.
The idea is to form a coalition of countries willing to establish a common ceiling of emissions, with a declining budget in time, and to apply border adjustments to protect their competitiveness.
According to Rafael Dubeux, the differential of the model is in the collective construction and the principle of justice. Emissions quotas would be distributed according to per capita income: rich countries would have smaller ceilings, while lower -income nations would have more room to issue.
“The idea is that the quotas take into account the opposite of per capita income. That is, those who have high income will have a smaller ceiling; those who have low income, a larger ceiling,” he explained.
To avoid competitiveness losses, the mechanism provides for border adjustments on imported countries that do not participate in the coalition.
“The border adjustment guarantees balance: those who do not join, pays to sell in the coalition market. Here we are saying that everyone is invited to join. You don’t want to? Okay. You will pay the price to sell here,” said Dubeux.
The proposal refers to three axes: effectiveness (by creating a real ceiling of emissions to a relevant group of countries), justice (by distributing the effort according to per capita income) and political viability.
He also pointed out that the project is being developed with the support of international academics, in work coordinated by Professor Catherine Wolfram, MIT and Harvard.
The initiative has already had a first document presented at a UN conference in Seville and is expected to gain expanded version during Climate Week in New York in September.
According to a study by Harvard University Salata Institute, such a coalition could reduce emissions to up to seven times more than current fragmented efforts and generate nearly $ 200 billion carbon pricing recipes for participating governments.
Brazil aims to articulate the adhesion of countries such as European Union, China, United Kingdom, Norway, Canada, Mexico, New Zealand and South Korea. Even in the United States, where there is no national market, California – equivalent to the fourth largest economy in the world – has shown interest.
