13 June 2013
EIB supports Althelia Climate Fund to save tropical forests
The European Investment Bank has agreed to contribute up to EUR 25m for the Althelia Climate Fund launched this week. The Althelia Climate Fund is a public-private partnership that will help reduce greenhouse gas emissions, with a focus on sustainable land use, ecosystem services and forest carbon.
Althelia Ecosphere is an innovative fund which will develop multiple revenue streams from forest protection and sustainable land use. It aims to demonstrate that financial performance can be fully aligned with sound environmental stewardship and social development. The fund will generate returns in two ways. Firstly, by investing in forest carbon and other socially and environmentally-orientated tradable carbon assets the fund can generate an income stream from standing forests. Secondly the fund will increase the volume and quality of a range of sustainably produced, certified agricultural commodities. Althelia will invest in projects around the world, with a strong focus on Africa and Latin America. The fund’s strategy is to align the interests of the local communities and the fund.
Jonathan Taylor, European Investment Bank Vice-President responsible for environment projects highlighted that: "The EIB is pleased to support the Althelia Climate Fund. Innovative investments of this sort will help to tackle deforestation and promote sustainable land use. This is a good example of our support for projects which will also have a positive social impact. Applying good environmental and social standards remains central to our work in all areas".
Philippe de Fontaine Vive, European Investment Bank Vice-President in charge of new product development and innovation said: “Innovation is indispensable for financing key sectors like climate change and the protection of biodiversity while taking account of food security. The European Investment Bank is very glad to support the Althelia Climate Fund which is based on performance-based payment for ecosystem services. These innovative financial instruments, especially the REDD+ mechanism, need to be deployed at large scale.”
The Althelia Fund is the Bank’s first operation to support REDD+ (Reducing Emissions from Deforestation and Forest Degradation), an important market-based instrument to protect standing forests and mitigate this important source of emissions. REDD+ credits give a financial value to the carbon stored in standing forests, generating a financial incentive to protect them, while compensating forest landholders for the opportunity cost lost to conserve their land. This represents a potentially powerful mechanism for biodiversity conservation and a mechanism for Althelia will invest in forest protection and sustainable land use around the world, with a strong focus on Africa and Latin America, generating revenues from carbon credits, production of certified agricultural commodities and other activities in particular REDD+ tropical forest conservation activities that reduce greenhouse gas (GHG) emissions by avoiding deforestation and forest degradation, protecting and enhancing forest carbon stocks.
A portion of the Fund’s carbon credits corresponding to the EIB investment will be sold to companies to facilitate corporate social and environmental responsibility objectives.
Sylvain Goupille, Managing Director of Althelia Climate Fund GP said: "The European Investment Bank deeply understands the need for simultaneously addressing natural capital preservation and economic development. Its commitment to the Althelia Climate Fund has been instrumental for the successful launch of this innovative public-private partnership that aims to deploy performance-based payment for ecosystem services in developing countries at scale"
All projects supported by the fund must demonstrate consent of the communities involved and have ensured meaningful dialogue, consultation and participation with stakeholders, verified by the application of the EIB Social Assessment Guidance Notes, as well as meeting the REDD+ Social and Environmental Standards. Projects must also comply with IFC Performance Standards (2012), meet Voluntary Carbon Standard (VCS) and Climate, Community and Biodiversity Alliance (CCB) certification standards.
Tropical forests are disappearing at a rate of about 13 million hectares per year. This has an impact not only at local level, but also globally: tropical forests are home to much of the planet's biodiversity, and are major repositories of carbon. Deforestation, forest degradation and related land use change is responsible for 15-20% of global CO2 emissions. Meeting the EU's objective of limiting climate change to 2°C above pre-industrial levels will require a cut of global emissions by at least 50% below 1990 levels by 2050. Such a reduction is impossible without substantial action to combat deforestation.
Recognising the importance of biodiversity, the United Nations has declared 2011 to 2020 the Decade of Biodiversity to underline the role of biodiversity and ecosystems in providing essential life support systems. The rapid disruption of tropical forests probably imperils global biodiversity more than any other contemporary phenomenon, and instruments to protect them, including forest-based carbon credits, have a potentially powerful role to play in the safeguarding of global biodiversity, as well in reducing greenhouse gas emissions.
Richard Willis, +352 621 555 758, firstname.lastname@example.org