UK Announces Intention to Invest £400 Million in Tropical Forests Forever Facility as a Loan

The UK government has announced its intention to invest £400 million into the Tropical Forests Forever Facility via a loan, subject to finalisation of the facility's governance and operational arrangements, completion of the UK's usual due diligence, and its conditions being met. The Department for Energy Security and Net Zero frames the loan structure, rather than a grant, as ensuring value for money for British taxpayers while still supporting climate and nature action, describing the approach as the UK "acting as an investor instead of a donor."

 

Funding the facility through a loan rather than a grant allows the UK to draw on a different government budget category, which the release says enables a reprioritisation of funds to support the UK's £2 cap on single bus tickets, a domestic cost-of-living measure announced separately on 22 July. Forest countries themselves will not be expected to repay the funding directly; instead, the facility is designed to generate investment returns through a performance-based model intended to both repay investors and reward countries that successfully protect tropical forests.

 

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As a condition of its investment, the UK government is seeking participation in the facility's relevant oversight mechanisms, stating this will help ensure strong outcomes for UK taxpayers and investors, including the City of London. The investment remains subject to final due diligence, including review of the facility's ultimate size, crediting arrangements, structure and loan terms. The TFFF was launched at COP30 and was an Earthshot Prize finalist.

 

Source: Department for Energy Security and Net Zero