EIB backed “game-changing” Climate Action Project wins award from United Nations
A project supported by the European Investment Bank to protect Peru’s delicate biodiversity and encourage farmers to grow environmentally sustainable cocoa crops has been held up as “game changing” in the fight against climate change by the United Nations Framework Convention on Climate Change (UNFCCC).
The investment in the Tambopata REDD+ Project in Madre de Dios is part of the Althelia Climate Fund, a highly innovative fund focusing mainly on projects in Latin America and Africa. The European Investment Bank (EIB) is a cornerstone investor in the Fund and has supported it with expertise and finance of more than EUR15m since the Fund was launched in 2013. The EIB is the world’s biggest provider of climate finance and a pioneer in the field of innovative approaches to climate investment.
The Fund’s sustainable cocoa project is one of 16 winners of the UN’s 2015 Momentum for Change Lighthouse Activities Awards. It is helping more than 1000 farmers to produce sustainable cocoa while protecting the biologically diverse Tambopata National Reserve and Bahuaha-Sonene National Park.
The awards are part of a wider effort by the UN as national governments work toward adopting a new universal climate agreement in Paris this year
Althelia Climate Fund and the project were singled out for the innovative and inclusive approach to financing, via a ‘payment for performance’ model: farmers receive financing on the condition that they will not deforest further, will restore 4,000 hectares of degraded land with cocoa-based agroforestry systems, and that a share of the proceeds from cocoa sales will go to investors. The project will also work with farmers to gain Fairtrade and Organic certification, which ensures fair labour and environmentally friendly farming practices.
In the last 5 years, the European Investment Bank has provided finance of around EUR 100 billion for climate action both in Europe and outside it. Last month, the EIB set a new 35% target for climate financing in developing countries. The EIB’s new EIB Climate Strategy also committed a greater focus on the impact of projects as well as more support for adaptation measures in countries particularly vulnerable to the effects of climate change.
Key facts on Tambopata REDD+ Project:
– The project protects 570,000 hectares of rainforest, ensuring that emissions of 4.5 million tonnes of CO2 equivalent are avoided by 2020
– Althelia Climate Fund’s carbon asset-backed loan of USD 7 million is fully collateralized by the project’s emission reduction units (carbon credits). This means additional carbon finance is leveraged to support the protection of standing forest and the restoration of degraded lands, benefitting small farmers who otherwise lack finance
– The Peru-U.S. debt swap fund, FONDAM, provides USD 2 million grant co-financing towards this project
– The investment aims to produce at least 3,200 tonnes per year of certified deforestation-free organic and Fairtrade cocoa. This cocoa will be sold through a farmer’s cooperative, which will secure higher prices for members and full traceability of the product
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