Financial Opportunities for Brazil from Reducing Deforestation in the Amazon

There are many new opportunities emerging in voluntary and compliance carbon markets for REDD+ (Reducing Emissions from Deforestation and Forest Degradation) credits. In this policy brief we focus on opportunities linked to the LEAF Coalition (Lowering Emissions by Accelerating Forest finance). We quantify the size of the opportunity from reducing deforestation in the Legal Amazon in dollars, and provide a roadmap of policy and regulatory changes, and actions required to seize this opportunity.

The framework for REDD+ was adopted at the COP19 in Warsaw in 2013. Since then, the bulk of results-based payments for REDD+ has been made by donor countries in bilateral or multilateral agreements with host countries (e.g., Amazon Fund), and therefore have been somewhat limited. However, it is expected that the financial flows for REDD+ will (and must) rise significantly with increased interest from the private sector either directly or through public-private partnerships.

LEAF Coalition (Lowering Emissions by Accelerating Forest finance)

The LEAF Coalition is a public-private partnership to provide results-based payments for high-environmental and social integrity credits from reducing carbon emissions from tropical deforestation and degradation (REDD+) at national or large subnational “jurisdictional” scales. The governments of Norway, the United States and the United Kingdom, and a group of major private companies, launched LEAF in April 2021. At the COP-26 meeting, the Coalition announced it had grown to include a total of 19 companies and had already mobilized US $1 billion in financing, representing the largest-ever public-private effort to protect tropical forests. LEAF continues to attract corporations and governments who are interested in buying high-quality REDD+ credits. Thus, the financing available for forest jurisdictions that achieve emissions reductions and removals is expected to grow.

What is the size of the opportunity?

Brazil has a competitive advantage on supplying high-quality forest carbon credits. Ending deforestation (illegal and legal) in the Brazilian Amazon in 10 years (2022-2031) could generate revenues in the magnitude of at least US $18.2 billion by 2031 through voluntary and compliance carbon markets at a floor price of US $10 per ton of CO2 as guaranteed by LEAF. Prices may also rise further and there are also opportunities for additional generation of credits through forest restoration (carbon removals). If prices rise to US $15 ton of CO2 in the 2027-2031 period, revenues can reach US $26 Billion. 

Read the full paper here.