The UK has announced its intention to invest £400 million into
the Tropical Forests Forever Facility (TFFF) via a loan. This
is subject to the finalisation of the Tropical Forest Forever
Facility's governance and operational arrangements, completion of
our usual due diligence and our conditions being met.
The UK investment into TFFF as a loan, not a
grant, ensures value for money for the British taxpayer. A UK
investment into the TFFF means loan
repayments will be made while still supporting climate and nature
action. This demonstrates the UK's new approach to climate
finance, acting as an investor instead of a donor.
By funding the TFFF through a loan,
instead of a grant, the UK government will be able deliver
additional climate finance using a different financial
transaction' budget. As announced on 22 July, this
reprioritisation allows a switch of funding to support the cap on
single bus tickets at £2 to help support people with the cost of
living. Crucially, forest countries will not be expected to repay
this funding. Instead, the Facility is designed to generate
investment returns from its performance-based model, enabling it
to both repay investors and reward countries that successfully
protect tropical forests.
As a condition of the UK government investment, the government is
seeking participation in the relevant fund oversight mechanisms.
This will enable the UK to work alongside other countries to
advance the UK's priorities and interests whilst overseeing the
investment, helping to ensure strong outcomes for UK taxpayers
and investors, including the City of London.
The investment remains subject to final due diligence, including
a review of the facility's final size, crediting arrangements,
structure and the terms of the loan. The UK government is proud
to be a playing a part in shaping a facility, which was launched
at COP30
and was an EarthShot Prize finalist, that will help keep the
planet's tropical forests standing for future generations.
