Amid the significant opportunity for global financing for tropical forest conservation through the Tropical Forest Forever Facility (TFFF), Indonesia is facing a paradox marked by persistently high deforestation rates. A study by MADANI Berkelanjutan, titled “Deforestation in the Transitional Regime Loss of Natural Forests by 2024,” recorded that Indonesia lost 206 thousand hectares of natural forest in 2024, an increase of about 71 thousand hectares compared with the previous year. This situation could threaten Indonesia’s ability to meet the requirements for receiving TFFF financing.
On the one hand, Indonesia has great potential to benefit from the TFFF global financing scheme because of its vast tropical forest area. On the other hand, the high rate of deforestation may undermine Indonesia’s eligibility and compliance with TFFF standards. This condition shows that tropical forest financing through TFFF remains a paradox in Indonesia’s current forestry reality. Therefore, Indonesia needs to ensure that national development policies are aligned with forest protection efforts, with the main objective of preserving all natural forest ecosystems so that the benefits of TFFF financing can be optimized sustainably.
In Indonesia, the development of food and energy estates has become a major driver of deforestation. Indonesia is among the 74 countries that meet the criteria as potential beneficiaries of TFFF, with approximately 90.18 million hectares of natural forest. However, in reality, more than 42%, or around 8.7 million hectares of natural forest, overlaps with food and energy security reserve areas, which could jeopardize Indonesia’s eligibility under the TFFF scheme. This is because the TFFF mechanism requires the average gross deforestation rate over three years to remain below 0.5% of the total eligible forest area, and it must show a declining trend in the accession year or when joining the facility. These requirements pose a major challenge for Indonesia, which in recent years has continued to experience fluctuating deforestation trends.
Nadia Hadad, Executive Director of MADANI Berkelanjutan, stated in the webinar “Examining Tropical Forest Forever Facility (TFFF): Perspectives, Risks, and National and Global Implications,” organized by MADANI Berkelanjutan in collaboration with Fern and Rainforest Foundation Norway (RFN) on 5 May 2026, that during the 2020–2024 period, Indonesia’s natural forest deforestation in 2024 rose sharply to around 206 thousand hectares. The main cause of deforestation in Indonesia is policy overlap between forest protection agendas and the implementation of National Strategic Programs (PSN). Amid global geopolitical dynamics, the energy crisis, and efforts to strengthen national food and energy security, the government continues to promote the development of food estates and energy estates. However, the expansion of these programs is seen as potentially conflicting with forest protection and deforestation prevention commitments, which are key requirements in the TFFF mechanism.
Unlike most climate financing schemes that focus on reducing carbon emissions, such as REDD+, the Tropical Forest Forever Facility (TFFF) is designed to provide incentives for countries that successfully maintain forest cover in a sustainable manner. The TFFF mechanism uses a blended finance scheme by gathering funding support from sponsor countries, philanthropic institutions, and private investors. In practice, TFFF has two main entities: The Facility and the Tropical Forest Investment Fund (TFIF). The Facility is responsible for overseeing forest cover monitoring and channeling incentive payments to recipient countries. Meanwhile, TFIF is responsible for managing and developing investments to generate revenue that will be used to support those incentive payments.
TFIF aims to mobilize USD 25 billion from sponsor countries and philanthropic institutions, along with an additional USD 100 billion from private investors through the issuance of green bonds in the capital market. In the webinar, Tyala Ifwanga, Forest Finance and Governance Campaigner at Fern, explained that these funds will be managed under provisions that exclude investments in sectors with major environmental impacts, such as oil, gas, coal, and activities related to peatland destruction. Nevertheless, the implementation mechanism is still considered to lack clear guidance. In fact, there are still many other sectors that directly drive deforestation.
Based on MADANI Berkelanjutan’s analysis, the oil palm plantation sector remains one of the main contributors to deforestation in Indonesia. The loss of natural forest occurs not only in pure oil palm concession areas, but also in areas where permits overlap with other sectors such as Forest Utilization Business Licenses (PBPH), oil and gas (migas), and minerals and coal (minerba). Data from 2024 show that the combination of oil palm and PBPH permits contributed the largest share of natural forest loss in overlapping areas, reaching around 12,428 hectares, followed by oil and gas and oil palm overlap at 9,680 hectares. These conditions indicate that protection of Indonesia’s natural forests remains weak. Indonesia’s opportunity to benefit from the TFFF financing scheme will continue to be shadowed by the ongoing paradox of deforestation. [ ]
The full webinar materials for “Examining the Tropical Forest Forever Facility (TFFF): Perspectives, Risks, and National and Global Implications” can be downloaded here.
https://drive.google.com/drive/folders/1uAMqE4WR97NoNiSQJGDKC9Jn_CgRJLi0
