Major Carbon Offset Project License Revoked

Environmental officials in Indonesia recently revoked the license of one of the world’s largest carbon offsets projects, claiming the license-holder, PT Rimba Raya Conservation, transferred its license to a third-party without ministry approval, operated beyond its sanctioned area, and failed to make required payments to the state.

The move by the Indonesian Ministry of Environment and Forestry’s action affects an area of more than 36,000 hectares (88,958 acres) in Central Kalimantan, on the island of Borneo. According to news reports, the project has issued more than 30 million credits since 2013.

Hong Kong-based InfiniteEARTH Ltd. has an agreement with Rimba Raya to sell the carbon credits, and officials say they believe they are registered and validated under Indonesia’s new carbon registry and standard. Officials with Toronto-based Carbon Streaming Corp., which agreed in 2021 to buy more than 50 million Rimba Raya credits from InfiniteEARTH over the next 20 years, said in a statement that they are waiting for more guidance from InfiniteEARTH and the Indonesian government.

Promoters cite the practice as a market-based solution to climate change and carbon emissions reduction and claim the market could stretch into the hundreds of billions in the future. But Indonesia’s action highlights negative issues surrounding carbon credit markets, which critics claim aren’t as beneficial as claimed and don’t result in any actual emissions reductions. Some in the timber industry are watching closely to see how carbon credit markets may affect timberlands since the business practice has the potential to remove large volumes of timber from the market for decades at a time.