Carbon Offsets Project the Size of Las Vegas Wins Court Reprieve

(Bloomberg) -- One of the companies behind the world’s biggest carbon offsets project won a key court battle in Indonesia as it attempts to resume activity at the vast site in Borneo.

The Jakarta State Administrative Court backed a request from PT Rimba Raya Conservation to overturn a decision last year by Indonesia’s government to revoke the firm’s license to operate across 36,000 hectares (139 square miles) of tropical peat swamp forest in Central Kalimantan. 

Rimba Raya Conservation, which had cut staff, will now attempt to rebuild capacity at the project, said the firm’s president commissioner Rusmin Widjaja. The company is also seeking to resolve a separate dispute with a partner, Hong Kong-based developer InfiniteEARTH Ltd.

The site generates carbon credits through the conservation of a stretch of forest that’s about the same size as Las Vegas. It’s also a buffer zone between oil palm plantations and the 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 will have a right to appeal the ruling, didn’t immediately respond to a request for comment.

Polluters can use carbon offsets to meet climate goals by purchasing credits from projects that claim to avoid the production of emissions, typically through deploying clean energy or preventing deforestation.  

Though the sector has faced repeated challenges over the credibility of projects — and seen users like Google’s parent Alphabet Inc. stop buying some credits — demand for offsets is forecast to continue to grow as voluntary carbon markets expand, BloombergNEF analysts said in a February report. 

Rimba Raya has issued more than 30 million credits since 2013 and more than 25 million of those have been retired, making it the world’s largest single source of offsetting, according to data from non-profit CarbonPlan.

Governments are increasingly recognizing offsets projects as sovereign assets and proposing to enact measures that could trim global supply by about 11% through 2050 and push prices higher, BNEF said in its report. 

Indonesia, where President-elect Prabowo Subianto’s team aims to lift spending, sees offsets as a potential new source of revenue and is planning to remove an existing ban on sales of credits overseas. 

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