Nepal joins LEAF Coalition unlocking up to $55 million in forest carbon trade

Nepal on Friday signed a Emission Reductions Purchase Agreement (ERPA) with the LEAF Coalition, positioning the country to receive up to $55 million in results-based climate finance for its success in reducing deforestation and expanding forest cover. The agreement marks Nepal’s first formal entry into high-integrity jurisdictional carbon markets and makes it the first Asian nation to partner with the LEAF Coalition.

The LEAF Coalition (Lowering Emissions by Accelerating Forest finance) is a prominent public-private initiative launched in 2021 with a view to combat tropical deforestation by mobilising large-scale finance for climate protection. It is among the world’s largest initiatives supporting high-integrity forest carbon finance.

Under the deal, Nepal could sell up to four million tonnes of verified emission reductions generated through its jurisdictional REDD+ (JREDD) programme across Gandaki, Bagmati and Lumbini provinces between 2022 and 2026. REDD is a program centered on reducing emissions from deforestation and forest degradation.

The transaction is facilitated by Emergent, coordinator of the LEAF Coalition, and implemented under the Architecture for REDD+ Transactions (ART) using its TREES standard, which requires rigorous carbon accounting, robust forest monitoring, safeguards for Indigenous Peoples’ rights, permanence and leakage controls, and transparent benefit-sharing mechanisms.

The LEAF Coalition is a global public–private initiative backed by more than 30 major companies and the governments of Norway, the United Kingdom, the United States and the Republic of Korea. Participating forest governments are offered a guaranteed floor price of $10 per tonne for jurisdictional REDD+ credits. The United Kingdom and Norway will provide a purchase guarantee for an initial one million tonnes of emission reductions, while additional credits will be made available to corporate buyers through an extended purchase window.

The agreement also makes Nepal the first government to offer correspondingly adjusted carbon credits to private sector buyers through LEAF, enabling their use in compliance schemes such as the Singapore Carbon Tax and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Up to 25% of credits sold to the private sector will carry corresponding adjustments.
Once the payments are accessed, revenues will be distributed through Nepal’s emerging benefit-sharing framework, under which 80% of proceeds are expected to flow to community forest user groups, Indigenous Peoples, local governments and other implementing entities.

With this agreement, Nepal joins Costa Rica, Ghana, Ecuador and the Brazilian state of Pará as participating jurisdictions, bringing the total potential value of LEAF agreements with forest governments to more than USD 325 million.

Nepal’s forests, once heavily degraded, have recovered significantly through decades of community-based forest management. Forest cover has now risen to around 46% of the country’s total land area, with the government aiming to increase it further through strong policy, legal and institutional frameworks.