Setting up the ‘Tree Fund’ and Sustainable Charcoal

Commodity
Timber
Type of partnership
Forest Partnership
Current status
Implementation

To incentivize smallholder farmers to plant billions of trees across Africa and produce sustainable charcoal, Partnerships for Forests is supporting The Nature Conservancy to design a ‘Tree Fund’ and to conduct a feasibility study on sustainable charcoal production. 

Background

Reliance on unsustainable wood fuel – primarily charcoal – has been identified as the number one driver of forest degradation in Africa and a key factor in deforestation. Despite the rise in alternatives, total wood demand is expected to almost double by 2030. Charcoal consumption is increasing significantly in urban areas, and supply is unable to keep up with demand. The result is a huge ‘wood deficit’. To meet the demand sustainably, one to two million hectares need to be planted across the continent per year between now and 2030. Across Africa, less than 15,000 hectares were planted by the private sector last year.

The Project

To address this, Partnerships for Forests is supporting The Nature Conservancy (TNC) to design a ‘Tree Fund’ and to conduct a feasibility study on sustainable charcoal production. The Tree Fund is an innovative finance mechanism designed to incentivize forestry organisations and farmers to plant billions of trees for commercial use by providing finance at an affordable rate and for a long-time horizon. A key innovation is that the Tree Fund will take planted trees as collateral against loans. This way, the Fund would be able to provide loans at a much lower interest rate than unsecured loans. In addition, Partnerships for Forests is funding a study on how to produce charcoal sustainably and economically, which includes piloting and assessment of different charcoal harvesting and conversion practices.

By 2020 the Tree Fund aims to set in motion 50,000 hectares of tree planting by 2020 for project partner Komaza (a forestry business) and others, with an ambitious goal of reaching 10,000,000 hectares by 2030. The Tree Fund also aims to have sustainable charcoal production being demonstrated in each county in Kenya by 2020 and envisages all charcoal across East Africa being sustainably sourced by 2030.

Partners: The Nature Conservancy, Shell Foundation