EDFI Carbon Sinks is a joint guarantee programme designed by the members of the EDFI Association and EDFI Management Company under EFSD+, the financing arm of EU Global Gateway. The programme is designed to support European Development Finance Institutions (EDFIs) and their private and public co-investors to scale up equity investments in forestry and regenerative agribusiness companies investing in carbon sink projects, which include the following:
- Natural forests and natural marine ecosystems
- Outgrower schemes & smallholder forestry and algaculture
- Agricultural and other carbon sink investments such as blue carbon projects,
- Plantation forestry, and
- Forest and ocean related product processing for prolonged carbon storage.
The EDFI Carbon Sinks programme is unique in having been designed to focus exclusively on carbon sinks, by providing EFSD+ guarantee cover to de-risk EDFI’s long-term equity financing, both direct and indirect (through funds), which will catalyse additional investments from other EDFIs as well as their public and private co-investors. The target investees are forestry and regenerative agribusiness companies investing in carbon sinks projects.
Why support Carbon Sinks? A carbon sink project absorbs and stores carbon dioxide or other greenhouse gases from the atmosphere. The ocean, soil and forests are the world’s largest carbon sinks. According to the Intergovernmental Panel on Climate Change – IPCC (2023) investments in carbon sinks need to be three to six times greater than current levels to limit global warming to 2°C or 1.5°C. The current investments in nature-based solutions amount to USD 154 billion/year of which solely 17% comes from private capital. This is because carbon sinks require a very long investment horizon (20 years and beyond) which means the long wait for positive cash flows is unattractive to private capital looking for commercial returns sooner.
EDFI Carbon Sinks will contribute to important EU Policy Priorities such as the Global Gateway Climate and Energy objectives, the EU Forest Partnership, the TEI Green Alliance or the TEI Amazon Basin.
Total EFSD+ Guarantee support
€366 million
Geographical focus
Sub- Saharan Africa, Americas and the Caribbean, Asia, the Middle East, Pacific and the Western Balkans
Total EDFI financing mobilisation target
€3.8 billion
Total Co2 emissions removed from the atmosphere
8.5 million tons
