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ETC report: financing the end of deforestation

The Energy Transitions Commission (ETC) released a report detailing the financial implications of ending deforestation. The report, titled Financing the Transition: the Costs of Avoiding Deforestation, estimates that a minimum of $130 billion per year will be needed to halt deforestation by 2030. The ETC is a global coalition of energy leaders committed to achieving net-zero emissions by 2050 in line with the Paris Agreement's goals.

ETC report_ financing the end of deforestation_visual 1

Deforestation accounts for approximately 15% of total carbon emissions caused by human activities. The report highlights agriculture as the key driver of tree loss in tropical forests and forestry and wildfires as the primary causes of deforestation in temperate and boreal regions. The report emphasises the need for immediate action to end deforestation to limit rising temperatures.

Read more: Countries with the highest deforestation rates in the world

The report suggests that non-financial measures such as reducing consumer demand for products driving deforestation and the development of alternative businesses such as eco-tourism and sustainable agroforestry could theoretically end deforestation. However, the ETC acknowledges that these measures are partial solutions and that concessional payments will be necessary to compensate for lost profit opportunities until policy changes are in place.

Read more: Cultivating the future: How regenerative agriculture is transforming sustainable farming

The ETC report distinguishes two financial categories, capital investment, and concessional/grant payments, with the latter being critical. The report suggests that around $300 billion per year will be needed for decarbonisation actions in middle and low-income countries, with concessional financing coming from voluntary carbon credit markets, philanthropists, and high-income governments.

The report concludes that the $130 billion annual cost of protecting all forests at high risk of deforestation represents a significant increase from the $2–$3 billion currently paid annually for forest protection through carbon credits. The financing strategy outlined in the ETC report is both ambitious and realistic, and draws from all three concessional fund sources, in a feasible manner. It highlights the need for action to reduce the demand for deforestation-driving products by governments, businesses, and consumers.

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