Kathmandu. KATHMANDU: The Government of Nepal has signed a historic agreement to receive a maximum of USD 55 million in climate finance from the LEF Coalition in recognition of its efforts to mitigate deforestation.

With this, Nepal has become the first Asian country to receive funding from the Leaf Coalition. The Leaf Coalition is an innovative global public-private partnership initiative involving more than 30 large international companies and the governments of Norway, the United Kingdom, the United States of America and the Republic of Korea.

With the signing of this agreement today, the Ministry of Forest and Environment has reaffirmed its long-term commitment to the conservation and restoration of forests through the ‘Red Plus Zrid’ programme. The agreement was formally announced at a function held at a function. It was supported by the Environmental Defense Fund.

Nepal has also become the first government to provide carbon credits with adjustment to private sector buyers through LEAF. This will make it possible for compliance markets such as the Singapore Carbon Tax or the Carbon Offsetting and Mitigation Plan for International Aviation to be used. Up to 25 percent of the total credit provided to the private sector will be available with adjustment.

Nepal’s forest area now stands at over 46 percent, which the government aims to further expand through community forest management and strong policy and legal frameworks.

According to the government, the financing from the LIF agreement will contribute to achieving Nationally Determined Contributions, development of local communities, improvement of forest quality and conservation of biodiversity. This will directly benefit the community forest management system involving more than 30 lakh households in Nepal.

Due to the success in the expansion of forest cover, Nepal aims to reduce millions of tons of emissions and provide carbon credits to leaf buyers from 2022 to 2026. The agreement was signed with Emergent, the coordinator of the Leaf Coalition.

The UK and Norwegian governments will provide an initial guarantee of 1 million credit purchases. Additional credits will be made available to the private sector during the extended procurement period, the final amount of which will depend on the number of credits issued. According to Emergent, Nepal can get a maximum financing of $55 million from this agreement.