EDITORIAL: Is Rimba Raya a foretaste of what could come under Article 6 carbon trading?

Quantum Commodity Intelligence – REDD+ projects have been back in the news again in the past couple of weeks with Rimba Raya in Indonesia making most of the headlines, albeit mainly in the trade press. Elsewhere, the BBC's Panorama programme aired its 'investigation' into the sector, which, frankly I am not going to waste time going over as the issues it raised have been discussed many times previously in the last 18 months. 

The issues with Rimba Raya stem from a statement by Indonesia's Ministry of Environment and Forests (MOEF) back in March suspending and revoking the operating license for the project – one of the biggest nature-based projects in the voluntary carbon market (VCM) – citing " violations".

In particular, MOEF said the revocation was made because local company PT Rimba Raya Conservation, "among other things", has transferred permits to third parties without approval from MOEF, and had carried out carbon trading transactions wider than the permit area (PBPH) it owns.

The alleged violations are said by the government to relate to a cooperation agreement with Tanjung Puting National Park and PT Rimba Raya Conservation, which was assessed as not paying non-tax state revenue levy (known as PNBP) "in accordance with applicable statutory provisions".

PT Rimba Raya Conservation's partner on the project InfiniteEarth said it was not informed of the revocation of its forest license in Indonesia.

Jim Procanik, InfiniteEarth co-founder, posted a blog defending the project and "sensational headlines" and "those who were quick to rush to conclusions" following the publication of news reports stating the suspension of the project's environmental licence.

He also said the revocation of the licence should be seen in the wider context of carbon project holdups ordered by the Indonesian government since 2022. It also became clear that the relationship between the company managing operations on the ground, PT Rimba Raya Conservation, and the developer has grown distant.

Government policy

However, Rimba Raya is just one of many REDD+ projects in Indonesia that have had an uncertain status for two years as the government defines its policy regarding carbon trading. The project was the first to list under Indonesia's new carbon registry, the Sistem Registrasi Nasional (SRN), in late 2022, even if it has not yet achieved full verification because of holdups at government level.

To date, no voluntary carbon projects have been fully verified under SRN and developers are hopeful that a new environment minister following this year's presidential election will resolve the conundrum. Privately, many developers say Indonesia's current environment minister, Siti Nurbaya, has been unwilling to compromise.

Nurbaya is thought likely to leave as part of a reshuffle, but if the reports are true, she may have thrown another roadblock in the way of VCM projects. The minister's thoughts were reported by local media last week talking about "integrity" in international carbon markets and the country's aim to fulfil its greenhouse gas emission goals under the Paris Agreement.

But in December, analysis by non-profit Climate Action Tracker concluded that Indonesia's climate policies and commitments "currently reflect minimal action and are not at all consistent" with the Paris Agreement's goal to limit global temperature rises to 1.5° Celsius above pre-industrial levels. The overall description was "critically insufficient".

With all this in mind, is it possible that what is happening to Rimba Raya is the first example of the concerns that have arisen over Article 6 trading – that a host country might revoke credits if it later decides that the tonnes of carbon dioxide are going to be needed for its own climate targets? Rimba Raya alone is expected to generate approximately 2.7 million carbon credits a year until 2073.

This certainly highlights the potential problems that could arise for Article 6 carbon trading if, when the rules to fully operationalise it are concluded, there is a clause that allows host countries to revoke credits. The issue was one of the reasons for the failure to reach an agreement in Dubai last year and it is going to continue to be an issue in the negotiations in 2024. Rimba Raya has just highlighted how problematic this could be.