Kathmandu: The Government of Nepal has signed a landmark agreement to receive up to USD 55 million in climate finance from the LEAF Coalition in recognition of the country’s efforts to reduce deforestation and expand forest cover.
With the signing of the agreement, Nepal has become the first Asian country to receive financing from the LEAF Coalition, an innovative global public-private partnership involving more than 30 major international companies and the governments of Norway, the United Kingdom, the United States, and South Korea.
The agreement, signed by the Ministry of Forests and Environment, reaffirms Nepal’s long-term commitment to forest conservation and restoration under the REDD+ program. The deal was formally announced at a program organized in Kathmandu on January 23 with support from the Environmental Defense Fund. More than 100 participants, including representatives from government agencies, indigenous and tribal communities, local communities, and community forest user groups, attended the event.
Nepal has also become the first government to provide carbon credits with corresponding adjustments to private-sector buyers through the LEAF mechanism. This will allow the use of credits in compliance markets such as the Singapore Carbon Tax and the Carbon Offsetting and Reduction Scheme for International Aviation. Up to 25 percent of the total credits made available to the private sector will include such adjustments.
Currently, forests cover more than 46 percent of Nepal’s total land area. The government aims to further increase forest cover through community-based forest management and a strong policy and legal framework.
According to the government, financing received under the LEAF agreement will contribute to achieving Nepal’s Nationally Determined Contribution (NDC) targets, support local community development, improve forest quality, and conserve biodiversity. The initiative is expected to directly benefit Nepal’s community forestry system, which involves more than three million households.
Building on its success in expanding forest cover, Nepal plans to supply millions of tonnes of emission reductions and carbon credits to LEAF buyers between 2022 and 2026. The agreement was signed with Emergent, the coordinator of the LEAF Coalition. The governments of the UK and Norway will initially guarantee the purchase of one million credits, while additional credits will be offered to private-sector buyers during the extended purchase period. The final volume will depend on the number of credits issued. According to Emergent, Nepal could receive up to USD 55 million under the agreement.
