Firms including Amazon to buy $180 million in carbon credits from namesake rainforest

Sao Paulo: Amazon and other companies have agreed to buy carbon offset credits that will support the conservation of its namesake rainforest in the Brazilian state of Para, in a deal valued at around $180 million.

Amazon and at least five other firms will make the purchase through the LEAF Coalition forest conservation initiative, which it helped to found in 2021 with a group of companies and governments including the United States and United Kingdom.

The agreement is LEAF's first deal in the Amazon, the world's largest rainforest, which is vital to curbing climate change because of the enormous amount of greenhouse gas its trees absorb.

The Para state government and the LEAF Coalition first shared details of the deal exclusively with Reuters. Para Governor Helder Barbalho is set to announce the agreement on Tuesday evening during New York Climate Week, when about 900 events will be held alongside the UN General Assembly.

"Clearly it sends an important message: A company with a name referencing the Amazon making its first purchase with a state in the Amazon," Barbalho told Reuters.

Amazon confirmed the purchase in a statement, emphasizing the importance of tropical forest preservation in addressing climate change.

While demand for carbon credits globally has stalled, tech giants Microsoft, Meta and Google have all made purchases of offsets in Brazil this year.

Amazon, drug and chemical maker Bayer, consultancies BCG and Capgemini, clothing retailer HM and Walmart will collectively buy 5 million credits at $15 per credit. That is far above the average last week of $4.49 for carbon credits linked to nature, according to data provider Allied Offsets.

Each credit represents a reduction of 1 metric ton of carbon emissions from reducing deforestation in Pará state in the years 2023 to 2026.

Another 7 million credits will be made available for other companies to purchase. The US, UK and Norwegian governments have guaranteed a portion of those credits and will buy them if companies do not.

Para will host the UN COP30 climate summit next year, in a move that is the centerpiece of President Luiz Inacio Lula da Silva's bid to restore Brazil's environmental credentials after years of soaring deforestation.

Para has been the top state for deforestation since 2005, although destruction has been falling there since 2021. An area larger than New York City has been deforested in Para from January to August this year, a 20 per cent decline from a year ago, according to preliminary federal government data.