Carbon Credit Project Half the Size of Singapore Wins Court Reprieve

SINGAPORE — One of the companies behind the world’s largest carbon credit project has won a significant legal victory in Indonesia, allowing it to resume activities at its expansive site in Borneo.

The Jakarta State Administrative Court ruled in favor of Rimba Raya Conservation, overturning a previous decision by Indonesia’s government to revoke the company’s license to operate across 36,000 hectares of tropical peat swamp forest in Central Kalimantan. This area is roughly equivalent to half the size of Singapore or the size of Las Vegas.

Mr. Rusmin Widjaja, the president commissioner of Rimba Raya Conservation, stated that the company, which had previously downsized, will now work to rebuild its capacity at the project site. Rimba Raya Conservation is also seeking to resolve a separate dispute with its partner, Hong Kong-based developer InfiniteEarth.

The project site plays a critical role in generating carbon credits through the conservation of forest areas. It serves as a buffer zone between oil palm plantations and Tanjung Puting National Park, which is home to one of the world’s last wild populations of orangutans.

Indonesia’s Ministry of Environment and Forestry, which has the right to appeal the court ruling, did not immediately respond to a request for comment.

Carbon credits allow polluters to meet climate goals by purchasing credits from projects that avoid emissions, typically through deploying clean energy or preventing deforestation, or by removing carbon emissions, such as through tree plantations.

Despite facing repeated challenges over the credibility of carbon credit projects and seeing users like Google’s parent company Alphabet cease buying some credits, demand for offsets is expected to grow as voluntary carbon markets expand, according to a February report by BloombergNEF analysts.

Since 2013, Rimba Raya has issued more than 30 million carbon credits, with over 25 million of those credits retired, making it the world’s largest single source of carbon offsets, according to data from the non-profit organization CarbonPlan.

Governments are increasingly recognizing offset projects as sovereign assets and are proposing measures that could reduce global supply by about 11 percent by 2050, potentially driving up prices, BloombergNEF stated in its report.

Indonesia, where President-elect Prabowo Subianto’s administration aims to boost spending, views carbon credits as a potential new revenue source and plans to lift the existing ban on selling credits overseas.

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