30 may 2014, Mongabay news - The U.S. government will put financial support behind an initiative that offers  finance for emissions-reducing forest conservation projects.

In an  announcement made during the Carbon Expo conference in Cologne, Germany,  Secretary of State John Kerry said the U.S. Agency for International Development  (USAID) will lend up to $133.8 million to the Althelia Climate Fund for REDD+  carbon conservation projects and "sustainable land use" initiatives like  ecotourism and agroforestry. The money will effectively serve to mitigate risk  of backing such projects, which have suffered from a lack of a market for carbon  emissions reductions credits. USAID will cover up to half of the fund's losses  if a market fails to materialize.

"The income and employment generated  from financed businesses will discourage further deforestation while encouraging  forest maintenance and rehabilitation," said USAID in a statement. "Such  businesses will earn income from their operations, and will be eligible to earn  carbon credits that can be sold on the voluntary carbon credit market under  Reducing Emissions from Deforestation and Forest Degradation (REDD+)  methodologies. A variety of corporations and nonprofits buy the credits to  compensate for their own carbon emissions, to support philanthropy, and/or to  invest in greener supply chains."

Christian  del Valle, Managing Partner from Althelia Climate Fund, said the backing will  help finance new models for sustainably managing and protecting resources.

"This guarantee provided by USAID allows private capital to flow at  scale toward financing sustainable land use models that drive livelihood  improvements, ecosystem conservation and climate change mitigation," del Valle  said in a statement.

USAID says the project will be backed by private  sector money via the Development Credit Authority (DCA), requiring less than $6  million of the agency's funds.

"The Development Credit Authority (DCA)  uses partial credit guarantees to mobilize local financing in developing  countries. Guarantee agreements encourage private lenders to extend financing to  underserved borrowers in new sectors and regions. By opening up local channels  of financing, USAID is empowering entrepreneurs in developing countries at a  minimal cost to the U.S. taxpayer. The cumulative default rate of all loans  supported by USAID guarantees is only 1.85 percent."

The Althelia Climate Fund  was established less than a year ago with funding from European agencies, banks  and finance companies. USAID says the initiative is the largest private sector  fund dedicated to forest conservation.

"This will not only create profits  for Althelia's investors, it will help protect 20 rainforests and prevent 100  million tons of carbon dioxide from entering the atmosphere," said Kerry in his  video address.

"Over 1.5 billion people rely on forests to meet their  day-to-day needs, and the majority of these are poor rural communities,  including some 60 million indigenous people," added USAID Administrator Rajiv  Shah in a statement. "By creating incentives to better manage these forests, we  provide a pathway out of extreme poverty for families who depend on forests  while helping preserve critical ecosystems."

REDD+ is a performance-based  compensation program for developing countries to reduce emissions from  deforestation and degradation, which account for roughly 10 percent of total  carbon emissions from human activities. The private sector is attempting to  capitalize on REDD+ by setting up carbon conservation projects that could  someday generate carbon credits to meet government emissions reductions targets.  But until that market emerges, REDD+ credits are mostly sold in voluntary  markets to companies that aim to offset emissions for corporate social  responsibility programs.

Source: http://news.mongabay.com/2014/0530-usaid-althelia-climate-fund-redd.html?n3ws1ttr