The project developer of the prominent Rimba Raya REDD+ initiative expressed surprise over not being notified about the revocation of its forest license in Indonesia, as reported recently in the local media.
Indonesia’s Ministry of Environment and Forestry has reportedly suspended and revoked the operating license for the Rimba Raya Conservation project. This project could potentially be one of the largest nature-based projects in the voluntary carbon market (VCM). The reason cited is “carbon trading violations”.
Rimba Raya’s Carbon Regulatory Rift
Rimba Raya is situated on the southern coast of Borneo and plays a vital role in providing, preserving, and safeguarding hundreds of endangered mammal species. It’s also implementing community programs for nine villages.
Rimba Raya REDD+ project generates carbon credits by conserving High Conservation Value (HCV) tropical peat forests, housing over 350 million tonnes of carbon stored in its peat domes. The project holds the distinction of being:
- The first validated REDD+ project ever under the Verified Carbon Standard (VCS),
- The first REDD+ forest-carbon project globally to achieve triple-gold validation under the Climate Community and Biodiversity Alliance Standard (CCBA), and
- The first REDD+ initiative to achieve the highest possible rating of contributing to all 17 UN SDGs.
The revocation poses a significant challenge to the Rimba Raya REDD+ project, which was the first to be listed under Indonesia’s new carbon registry, the Sistem Registrasi Nasional (SRN), in late 2022. The SRN carbon credit system adheres to internationally accepted standards (UNFCC guidelines).
However, it has not yet undergone full verification due to delays at the government level.
The status of numerous REDD+ projects in Indonesia has been uncertain for the past two years, as the government formulates its policies regarding carbon trading. In April 2022, the Indonesian government suspended validating some of the carbon projects as they failed to meet regulations.
Though some of these initiatives are compliant, others still need to make necessary adjustments. The forestry ministry is firm about its rules and would take action against projects that don’t abide.
As of now, no voluntary carbon projects have received full verification under SRN. Developers are hopeful that a new environment minister, following this year’s presidential election, will address this issue. However, if the reports about the license revocation are accurate, it could further hinder VCM projects.
Why the Indonesian Government Revoked the Project
The Director of Forest Utilization Business Control, Khairi Wenda, was quoted by news site Sabungmaruake.com. It states that the primary reason for revoking Rimba Raya’s permit was the transfer of the permit to a third party “without approval” from the Minister of Environment and Forestry, referred to in Indonesia as LHK.
According to the article, Rimba Raya engaged in carbon trading transactions that extended beyond its licensed area. Thus, it violates the cooperation agreement with Tanjung Puting National Park.
Additionally, Rimba Raya was criticized for not paying Non-Tax State Revenue (PNBP) in accordance with applicable laws and regulations.
The revocation of the license is seen as an enforcement of regulations related to carbon trading in Indonesia. The move aimed at preventing double counting and double claims between countries in efforts to reduce carbon emissions in accordance with the Paris Agreement.
Indonesia initiated a carbon credit trading market in September last year. This is in line with its commitment to reducing carbon emissions and reaching net zero by 2060.
As the largest emitter in Southeast Asia, Indonesia has chosen the Indonesia Stock Exchange (IDX) as the platform for trading carbon credits. This exchange will facilitate carbon trading and also encourage the transition to cleaner energy sources, thereby mitigating the climate impact of the country’s heavily coal-dependent power sector.
- RELEVANT: Indonesia Launches Carbon Credit Market In A Leap Toward Net Zero
Legal Limbo: InfiniteEarth’s Response to the Revocation
However, InfiniteEarth, the developer behind the project, stated that the legal framework for carbon projects in Indonesia remains uncertain. It mentioned that its business partner and concession holder, PT Rimba Raya, has not informed them about the alleged suspension.
InfiniteEarth clarified that the allegation of permit transfer is incorrect, asserting that PT Rimba Raya remains the concession holder. And InfiniteEarth has been the project proponent and owner of the carbon rights since the project’s inception. It highlighted its reaffirmation through audits and validations by SRN.
Regarding the project’s obligations, InfiniteEarth stated that some are beyond their control and are the responsibility of their partner, PT Rimba Raya Conservation. Expressing disappointment, InfiniteEarth affirmed its commitment to resolving the concession rights matter to ensure the project’s continuity.
Rimba Raya is anticipated to generate around 2.7 million carbon credits per year, according to one of its contracted offtakers, Canadian credit aggregator Carbon Streaming.
In August 2021, Carbon Streaming’s agreement with Rimba Raya REDD+ developer aims to generate revenue from carbon credit sales. The income contributes to various initiatives, such as local community development, infrastructure projects, and the protection of the project area.
But the recent news will largely impact the project activities and the benefits it brings to the community and the sector.