Indonesian government revokes Rimba Raya REDD project’s license
"To say we are disappointed, is an understatement," project developer InfiniteEARTH says.
The Indonesian government has revoked the license of the Rimba Raya Biodiversity Reserve Project for violating local regulations. The project has issued more than 33.6 million carbon credits since 2013.
On 1 March 2024, the Ministry of Environment and Forestry put out a press release stating that PT. Rimba Raya Conservation, which holds the license for the Rimba Raya project, had:
transferred permits to third parties without approval from the Minister of Environment and Forestry;
carried out carbon trading transactions based on an area larger than the permit area it owns, including from the Tanjung Puting National Park, in violation of the cooperation agreement with the National Park; and
failed to make required non-tax payments to the state.
Bloomberg notes that,
Given the project’s scale, the government’s action creates potential consequences for carbon exchanges, traders, and companies that have bought Rimba Raya credits to offset emissions. It also highlights the risks that can be obscured by multiple participants, and the threat of emerging and rapidly changing government regulations.
The project developer is a Hong Kong-based company called InfiniteEARTH. The company was established in 2008 specifically to develop the Rimba Raya project.
Gazprom Marketing and Trading and Shell Canada were among the supporters of the project from the beginning. Gazprom forward purchased carbon credits from the project.
The Rimba Raya Project Document thanks Gazprom, stating that “Their leadership and support has been a crucial component of the project’s success.”
Shell Canada is also acknowledged, “for their tireless work in the initial development of the peat methodology”.
In 2021, the Indonesian government put in place a moratorium on international trading of carbon credits. S&P Global reported Finance Minister Sri Mulyani Indrawati as saying that,
Because of the low prices of credits in Indonesia, international buyers from countries with high prices would be jostling to buy Indonesian credits for their offset requirements leaving few credits for the country’s own requirements.
In August 2021, Carbon Streaming Corp. announced that it had entered into a deal with InfiniteEARTH to buy 57.3 million carbon credits over the next 20 years at US$8.50 each. Carbon Streaming is selling carbon credits from Rimba Raya on its website for US$20 each, plus processing fees (which comes to a total of US$21.20).
In a press release put out last week, Carbon Streaming states that,
Carbon Streaming is advised by InfiniteEARTH that it intends to dispute any revocation of the Concession License that would impact its carbon rights and is seeking clarification from the MOEF as to the current status of the Concession License and the ramifications of any such revocation, including on the status of InfiniteEARTH as the project proponent of Rimba Raya under the Indonesian government’s national carbon registry, Sistem Registri Nasional Pengendalian Perubahan Iklim (the “SRN Registry”), and any impact on their rights to both historical and future credits as established through the collaboration agreement with PT Rimba Raya Conservation.
REDD-Monitor sent some questions to InfiniteEARTH based on an Indonesian media report about the license being “suspended and revoked”. The company’s responses are posted here in full and unedited:
REDD-Monitor: Is it true that the license has been revoked?
InfiniteEARTH: We cannot comment on the revocation of PT Rimba Raya Conservations’s concession license, as they have yet to inform us of such, which is a direct violation of our collaboration agreement, if true.
REDD-Monitor: What does this mean for the future of the Rimba Raya REDD project?
InfiniteEARTH: The allegation that the “permit” was transferred is wholly incorrect. PT Rimba Raya has always been the concession holder and InfiniteEARTH has always been the project proponent and has always been the owner of the carbon rights through contract since inception of the project. This has been reaffirmed in four (4) VERRA audits and relatively recently reaffirmed by SRN (the Indonesian government’s new carbon trading verification and trading platform) when InfiniteEARTH successfully registered and passed a validation of the project under SRN in December of 2022. To our knowledge, the status of InfinteEARTH as Project proponent of the project under SRN has not changed, nor has the Validation of the project, that InfiniteEARTH conducted with SRN, been reversed.
REDD-Monitor: I note from the Verra Registry that the project is listed as "registered", but that no carbon credits appear to have been sold since 1 April 2021. Yet the Indonesia media reports that, Rimba Raya "transferred permits to third parties without approval from the Minister of Environment and Forestry". Could you please explain this apparent discrepancy? How were carbon credits transferred without appearing on the Verra registry?
InfiniteEARTH: The issue of the area coinciding with the Tanjung Puting National Park has been formally (in writing) addressed and resolved in multiple forums on multiple occasions. We have no further comment.
We are dismayed that PT Rimba Raya Conservation has failed to notify us of this revocation. We have waited patiently for the regulations in Indonesia to be finalized and to be allowed to finish the SRN Verification, after successfully being Validated by SRN in 2022. InfiniteEARTH has always done our part in complying with all rules pertaining to Indonesian regulations including not selling any credits past the moratorium in 2021. Unfortunately, some of the project’s obligations are outside of our control and are part of the responsibilities of our partner PT Rimba Raya Conservation. To say we are disappointed, is an understatement. As the original and current project proponent and funder, we will seek to resolve the matter of concession rights in order to ensure the continuation of the project.
REDD-Monitor: Carbon credits from Rimba Raya are available for sale on the Carbon Streaming website (for US$20 each plus processing fees). Could you please explain how this is possible given that no credits have been issued from the project since 1 April 2021?
I understand that under the Carbon Streaming model, Carbon Streaming pays a deposit to the Rimba Raya project in return for the rights to future carbon credits. However, what I don’t understand is how Carbon Streaming can already sell Rimba Raya carbon credits to the public - apparently before those credits have been issued by the project, or registered in the Verra Registry. What exactly do buyers of Rimba Raya carbon credits receive when they buy from Carbon Streaming's website?
InfiniteEARTH: Any credits you see for sale anywhere are credits bought from the secondary market, all of which would have to have been bought from InfiniteEARTH prior to April 2021.
One little detail to NEVER overlook: "failed to make required non-tax payments to the state."