Jakarta court voids revocation of Rimba Raya carbon project license: investor

The State Administrative Court of Jakarta has ruled that the Indonesian government's revocation of the forest utilization business license for the Rimba Raya project is void, according to a July 15 statement by Carbon Streaming Corp., one of the project's investors, signaling a potential resumption of project activities.

Rimba Raya is one of the world's largest nature-based carbon projects. As of April, 25.70 million Rimba Raya credits have been retired and used for emission offsetting claims, which accounts for 9.1% of the total retired volume of all nature-based avoidance credits. Major retirements from this project were made by entities such as Volkswagen Group, Gucci and Delta Air Lines, according to S&P Global Commodity Insights data.

Carbon Streaming, a Toronto-based project investor, purchased Rimba Raya credits directly from the project's developer and served as an intermediary to sell these credits to downstream buyers, namely companies that have committed to emission reduction targets.

Carbon Streaming said PT Rimba Raya Conservation, the holder of the forest utilization business license, filed a claim against the Ministry of Environment and Forestry, or MOEF, challenging its decision in 2023 to revoke the project's license.

On July 11, the Jakarta court reached a decision on the claim and announced that the revocation by MOEF is void, according to the statement, adding that MOEF has 14 days from the decision's announcement to appeal to the court.

As such, the Jakarta court's ruling is yet to have permanent legal force, Carbon Streaming said.

Before the court reached the decision, Carbon Streaming said an interlocutory decision was issued May 16, requiring MOEF to suspend its decree on the license revocation and allow activities on the project to resume. These decisions will remain in place during any appeal brought by MOEF.

Uncertainties remain

Carbon Streaming said that for the financial year ended March 31, the company determined the fair value of the Rimba Raya Stream to be zero due to the license revocation, adding that it will reevaluate the stream's fair value if there are concrete changes in the project's status or Indonesia's regulation.

Notably, Carbon Streaming's purchase and sale agreement was signed with InfiniteEARTH, according to a statement issued earlier in 2024. However, PT Rimba Raya Conservation announced in May that it had terminated its collaboration with InfiniteEARTH in 2023, rendering InfiniteEARTH no longer involved in this project.

Verra, the Rimba Raya credit issuer, has also suspended InfiniteEARTH's carbon registry account since May.

Consequently, whether Rimba Raya credits can be delivered to Carbon Streaming under the previous agreement remains uncertain, even if the license revocation is reversed.

"The company is continuing to evaluate all legal avenues to protect its investment in the Rimba Raya project and to strictly enforce its legal and contractual rights under the Rimba Raya Stream," Carbon Streaming said in the statement.

Carbon Streaming is one of many stakeholders impacted by the turmoil surrounding this project. Carbon exchanges, including Climate Impact X, have also offered Rimba Raya credits. Additionally, these credits have been traded among traders and brokers in the over-the-counter market.

Platts, part of Commodity Insights, assessed nature-based avoidance credit at $3.7/mtCO2e on July 15.