Indonesia revokes licence of world’s largest forestry offsets project

The revocation of the licence for one of the world’s largest carbon offsets projects in Central Kalimantan, Indonesia, has raised significant concerns about the future of carbon exchanges, traders, and companies involved in the project. The Ministry of Environment and Forestry cited several violations by the licence holder, Rimba Raya Conservation, including transferring its licence without approval, operating beyond its sanctioned area, and failing to make required payments to the state.

This development has potential consequences for carbon markets as companies may have purchased Rimba Raya credits to offset their emissions. Carbon offsets play a crucial role in climate change mitigation, but recent scrutiny of the voluntary carbon market has highlighted challenges such as overblown green claims. The incident underscores the risks associated with relying on carbon credits for emissions reduction strategies.

InfiniteEarth, a Hong Kong-based company, markets the Rimba Raya project and has agreements to sell its carbon credits. Another company, Carbon Streaming, agreed to purchase millions of Rimba Raya credits over the next two decades. Both companies are now seeking clarity from the Indonesian government and Rimba Raya Conservation regarding the project’s future.

The lack of response from the Indonesian government and Rimba Raya Conservation adds further uncertainty to the situation. This incident underscores the importance of robust regulatory frameworks and transparency in carbon offset projects to ensure their effectiveness in mitigating climate change.