Ukraine’s forestry sector explores the potential of green financing

The Head of the State Forest Resources Agency, Viktor Smal, together with World Bank experts, discussed financing the needs of the forestry sector through revenues generated from the sale of carbon credits. In the future, this could bring Ukraine tens of millions of dollars annually.

«We continue working with World Bank experts on a project to attract ‘green financing’ for the development of Ukraine’s forestry sector. The overall idea is to create a model that will finance forest projects through the carbon market, using revenues from the sale of carbon credits», - Viktor Smal noted.

According to him, forests absorb carbon, and this volume can be standardized, assessed, converted into carbon credits, and sold on the carbon market. For example, if forests absorb 20 million tonnes of CO₂ annually and the price per tonne is $30, this would generate $600 million per year.

These funds are paid by investors or countries interested in carbon credits. For instance, Japan could potentially act as a buyer of Ukraine’s carbon credits. The revenues could be directed toward the conservation and development of naturally afforested areas, demining of forests, and further digitalization of the forestry sector.

«In many countries, forests are not included in emissions trading systems at all due to the complexity of monitoring. Therefore, for us, this is an ambitious task with significant prospects, given the scale of forest resources and their growth potential. According to World Bank experts, the forestry sector is the most complex in carbon projects, but if we succeed, it will be much easier to implement these approaches in other sectors», - Viktor Smal emphasized.

He added that the idea is currently at an early stage – the foundation of the project is being laid, including all its components, and the strategy and directions are being defined. According to preliminary estimates, its total value is around $240 million.

«The World Bank will act as a guarantor and partner in attracting investors, ensuring the technical implementation of the project, and supporting its initial phase. There is still a lot of work and discussion ahead, but we are maintaining a strong pace and I am confident we will be able to move forward quite quickly», - emphasized the Head of the Agency.