Nepal becomes first Asian country to sign LEAF Coalition Agreement

Nepal on Friday, January 23, signed an agreement to receive up to $55 million in climate finance from the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition in recognition of the country’s efforts in forest protection.

With the deal, Nepal became the first Asian country to sign an agreement to receive finance from LEAF, an innovative global public-private initiative comprising over 30 major companies and the governments of Norway, United Kingdom, United States and Republic of Korea.

By signing the agreement, the Government of Nepal has renewed Nepal’s longstanding commitment to protecting and restoring its forests via its jurisdictional REDD+ (JREDD) program, read the joint statement issued the same day. “The agreement was marked at a special event in Kathmandu today, which was supported by Environment Defense Fund and attended by over 100 stakeholders from government, Indigenous Nationalities, local communities and forest user groups,” read the statement.

Nepal also became the first government to make correspondingly adjusted credits available to private sector buyers via LEAF, enabling use for compliance schemes, such as the Singapore Carbon Tax, or the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Up to 25 percent of credits for the private sector will be available with corresponding adjustments.

Nepal’s forest cover has now reached over 46 percent of its total land area.

According to the Nepal government, funds from the LEAF agreement will support the country in achieving its Nationally Determined Contribution (NDC) by contributing to local community development, forest quality enhancement, and biodiversity conservation, while benefiting a substantial portion of the over 3 million households engaged in community forest management in Nepal.

“Due to its success in increasing forest cover, Nepal aims to make millions of tonnes of high integrity emissions removals and reductions credits available to LEAF buyers from the years 2022 to 2026, via the agreement signed with Emergent, the coordinator of the Coalition,” the statement added. “The governments of the U.K. and Norway will provide a purchase guarantee for an initial volume of 1 million reductions and removals credits.”

Additional credits will be made available for corporate buyers for an extended purchase window, with final volumes transacted dependent on the number of credits issued. The approach, according to the statement, has simplified the process of signing the agreements with Nepal, while providing private sector buyers with greater flexibility on the timing of credit purchases.

Emergent anticipates that this will lead to greater overall corporate demand, driving higher volumes of climate finance to protect Nepal’s tropical forests. Overall Emergent calculates that the agreement could deliver up to $55 million in funding for Nepal.

The agreement covers the forward purchase of high-integrity forest carbon credits from Nepal’s government-led program to reduce emissions from deforestation and forest degradation. Credits will only be issued and available for sale following independent verification and validation, demonstrating that they meet the robust criteria of ART’s standard TREES2 , which ensures the highest standards of environmental integrity and social safeguards. 

“The total potential value of LEAF deals for forest governments now stands at over $325 million, with Nepal following Costa Rica, Ghana, the Brazilian State of Pará and Ecuador in signing agreements,” added the statement. 

Govinda Sharma, Secretary, Ministry of Forests and Environment, said that becoming the first country in Asia to sign a LEAF Coalition deal, demonstrated the progress Nepal has made in restoring and expanding forests. “We have worked for many years to reach this point, bringing stakeholders together to develop community-based forest management programs, which draw on the traditional and customary knowledge of our people,” Sharma added. “We have strived to build an inclusive national REDD+ program that shares benefits with those involved in fighting forest loss….We are particularly proud to be the first country to offer credits with corresponding adjustments to LEAF private sector buyers and look forward to securing significant levels of demand.”

Eron Bloomgarden, CEO of Emergent said: “This agreement shows that healthy forests, managed in partnership with Indigenous Peoples and local communities can provide a valuable and sustainable source of income.”

Buddha Gharti Bhujel, Senior Vice President and REDD Focal Person of the Nepal Federation of Indigenous Nationalities (NEFIN), said, “We are pleased to see the progress that the government is making with consultations in developing benefits sharing plan and are optimistic that proceeds from the LEAF Coalition will be shared fairly with Indigenous peoples and local communities whose traditional knowledge and practice plays such an important role in protecting our forests.’

Similarly, Thakur Bhandari, President of Federation of Forests User's Group Nepal (FECOFUN), emphasised that the community forest users’ groups were at the forefront of conserving and restoring the forest, working hard, using knowledge and skills, and protecting homes. “We have been pleased to participate in the consultations that the government has run on various safeguards aspects including benefits sharing plan development and feel that our voices are being listened to,” said Bhandari. “As an umbrella organization of community forest user groups, FECOFUN looks forward to the final benefit sharing plan and an equitable share for all involved in protecting our precious forests.”

Rob Fenn, UK Ambassador to Nepal, added: ‘This is a major step forward in the effort to combat deforestation and protect vital ecosystems both in Nepal and more widely.”

Dagny Mjøs, Norway’s Ambassador to Nepal, added that the Government of Nepal has made great strides to tackle deforestation and increase tree cover and have ambitious plans to go further. “Norway is proud to support this agreement which shows how long-term commitment and international cooperation can drive meaningful action for climate and bring real impact for people and communities on the ground,” she added.

Joint Secretary and Chief of REDD IC, Nabaraj Pudasaini, underscored REDD IC’s role as the key implementing agency for Nepal’s jurisdictional REDD+ program. He confirmed that, with support from FRTC, the TREES Monitoring Report will be submitted soon and reaffirmed Nepal’s commitment to meeting first delivery requirements under the LEAF Coalition Agreement. 

He noted the completion of key readiness milestones — including the TRD Report, REDD+ Strategy 2025–2034, Summary of Information, and FPIC Guideline — and acknowledged the essential role of Indigenous Peoples and Local Communities. 

Pudasaini emphasized that upcoming efforts will focus on reduced deforestation and degradation, restoration, and sustainable forest management through collaboration with IPLCs and all three tiers of government. 

Added Sudha Khadka, Nepal Country Director of RECOFTC, “The country has made great strides in recent years to protect forests through effective policy and strong partnership at the local level. Finance from this agreement will reward this success and help fund future efforts to build a sustainable economy based on healthy forests."