Klimaskovfonden — Danish Climate Forest Fund (Reforestation and Peatland PES)

Agriculture accounts for over a quarter of Denmark's greenhouse gas emissions. The Danish parliament established Klimaskovfonden in 2020 to accelerate voluntary conversion of drained low-lying farmland, degraded peatlands and marginal agricultural land into native forests and rewetted wetlands.

The fund pays landowners to convert drained farmland to forest or wetland, recovering costs by issuing certified CO2 reduction and removal contribution credits (BVCM) sold to Danish companies and individuals.

The fund acts as a state intermediary: it enters payment agreements with willing landowners, finances restoration, and follows Denmark's national carbon-certification rules, which are integrated into national climate inventories. Native and climate-adaptive species mixes are mandated for resilience and biodiversity.

In 2022, Klimaskovfonden established 24 new forests totalling 230 hectares, projected to sequester 107,500 tonnes of CO2 over their lifetime. The June 2024 Green Tripartite Agreement commits to rewetting 140,000 ha of drained peatlands and creating 250,000 ha of new forest by 2045, backed by a 40 billion DKK (~US$6 billion) state Green Area Fund.

The fund represents a promising institutional model — state-backed, transparent, domestically certified — but project-scale results to date (230 ha) are modest relative to the 140,000 ha target, and measured sequestration evidence remains early-stage since lifetime CO2 projections have not yet been independently audited at scale.