Green Growth: Brazil's Bold Bet on Reforestation and Carbon Credits
Brazilian startup re.green secures $14.13 million from BNDES and Bradesco to boost reforestation efforts. This initiative supports Brazil's aggressive climate goals, leveraging a $10 billion fund. The startup restores degraded land to generate carbon credits, drawing industry attention amid a burgeoning carbon market.
Brazilian reforestation startup re.green has secured 80 million reais ($14.13 million) in financing from the state development bank BNDES, with Bradesco as a financial intermediary, as announced on Monday. This deal mirrors a previous 160 million real agreement by Mombak, marking the inaugural reforestation project supported by Brazil's substantial 10 billion real 'New Climate Fund,' which was launched in 2023 to bolster climate-centric projects.
This development arises as Brazil's emergent carbon market quickly progresses, drawing interest from private investors and financial entities such as Bradesco and Santander, the latter also serving as an intermediary for Mombak. Despite the positive momentum, some restoration startups express challenges in securing loans to mitigate capital expenses and finance operations due to lingering risks perceived by investors.
"Our strategy focuses on de-risking to gradually reduce uncertainty and build market confidence," stated re.green's CEO Thiago Picolo. The start-up's financial agreement with BNDES, and for the first time involving Bradesco, represents a step toward enhancing certainty, investor confidence, and facilitating fundraising efforts.
Re.green is actively involved in acquiring or partnering with farmers and ranchers to reforest degraded lands in the Amazon and Brazil's Atlantic rainforest. By transforming these lands back into forests, the company generates valuable carbon credits that can be leveraged by businesses to offset their carbon emissions.
Among its backing, re.green has support from Microsoft, billionaire Joao Moreira Salles, and asset management firms like Dynamo and Gavea. With the BNDES's financial support, this initiative highlights a significant tool for channeling investments into the rehabilitation of Brazil's degraded areas," said Aloizio Mercadante, head of the state development bank.
This initiative underscores the potent capabilities provided by President Luiz Inacio Lula da Silva's decision, empowering BNDES to ardently address the climate crisis. The bank's involvement aligns with Brazil's 2015 pledge to restore 12 million hectares of native forests by 2030, reaffirmed by Lula last year.
(With inputs from agencies.)
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