Re.green Allocates R$187 Million from Climate Fund to Transform Forest Projects

Re.green, a startup launched in 2021, is making waves in the world of environmental restoration. The company recently hit a milestone by fully utilizing resources from the Climate Fund for native forests. They secured R$187 million for a project that spans 15 years, with the goal of generating carbon credits to sell to Microsoft.

Gustavo Zeno, Re.green’s CFO, emphasizes that this project could be a game-changer for forest restoration in Brazil. It combines public money, private investment, and reliable contracts, showing that the sector is ripe for growth.

The financing comes from the Climate Fund, which is managed by the Brazilian Development Bank, or BNDES. This fund has R$7 billion approved for 14 projects, mainly in the Amazon. Notably, R$5.7 billion of this is earmarked for loans at just 1% interest.

Zeno points out that banks play a crucial role in nurturing young sectors like forest restoration. BNDES, in particular, offers favorable terms that align well with the business model. According to BNDES’s environmental division head, Nabil Kadri, these projects promise not just environmental benefits but also job creation—over 70,000 jobs—and the ability to remove around 54 million tonnes of carbon from the atmosphere.

In March 2024, Re.green struck a landmark deal with BNDES for this ecological restoration project. The funds will be spent on acquiring degraded land and planting forests. As these trees grow, the carbon they capture will turn into tradable credits on the market. This underscores the idea that restored forests can be both beneficial for the environment and profitable.

Kadri notes that Re.green’s initiative is part of a larger vision to boost the native forest sector in Brazil. BNDES President Aloizio Mercadante further supports this view, explaining that the Climate Fund is fostering a new “restoration economy” in the country.

Financing for Re.green relied on guarantees from two major banks, Itaú and Bradesco. These banks took on project risks, allowing BNDES to focus on backing those guarantees. Luciana Nicola from Itaú highlights the solid structure of the project and its promising independent ratings, which reflect its environmental impact.

Bradesco’s Felipe Thut adds that this project exemplifies responsible innovation. Such collaborations illustrate that financial viability and environmental concerns can coexist, which is vital for Brazil’s sustainable future.

At a recent climate summit (COP30) in Belém, Re.green gained approval for an additional R$250 million in financing, which has a longer repayment term of 25 years. With 17,000 hectares already in restoration, they aim to expand to 35,000 hectares in partnership with Microsoft, targeting a total of 1 million hectares in Brazil.

Zeno encourages viewing ecological restoration as an economic asset. Carbon credits are not only tradable but also represent high-value investments, particularly when they contribute to biodiversity and sustainability. In addition to Microsoft, Re.green has partnerships with other large companies like Nestlé and Vivo.

This effort reflects a broader trend in environmental finance, showing that sustainable practices can lead to tangible economic benefits.



Source link