Rimba Raya is one of the world’s largest offset projects and among the more highly regarded projects available on the market today – a tropical haven in Indonesia where both the atmosphere and endangered orangutans are protected through forest preservation. Unfortunately, the project’s future looks uncertain. Carbon Pulse, a carbon market news outlet, recently reported that the Indonesian government revoked a license crucial to the continued operation of Rimba Raya and that the project is now “struggling to keep afloat.”
Though nobody knows exactly what might happen, the mere possibility of Rimba Raya going under illustrates the dangerous precarity of the global carbon market.
We’ve written a lot about the irony of how forest fires that are themselves linked to climate change put offsets at risk. But the ironies go deeper still. Offsets are a politically and economically convenient solution to climate change that can be very easily undermined by politics and economics.
If whatever is happening with the Indonesian government ends up sinking Rimba Raya, the project’s failure would use up around 46 percent of the buffer pool for Verra, one of the largest carbon credit registries. Buffer pools serve as a self-insurance program that can be used to shore up carbon offsets when individual projects run into difficulties. But Verra’s buffer pool only contains around 72.3 million credits and Rimba Raya has been issued 33.6 million credits. The failure of this single project, due to still vague and developing political decisions, would be devastating to Verra.
And the problems only get worse. If both Rimba Raya and another large, recently profiled and deeply problematic project called Kariba fail, it could result in the loss of approximately 83 to 96 percent of Verra’s buffer pool (combining our estimate for Rimba Raya with recent reporting from Bloomberg). Given the sheer size of Verra’s registry, which has issued over a billion offset credits to date, a failure of Rimba Raya — especially if paired with a Kariba failure — would have widespread repercussions for the global carbon market.
The issue here isn’t whether or not Rimba Raya is a “good” or “bad” project. Rimba Raya seems to be held in fairly high regard. The project was developed during a time of high deforestation rates across Borneo, and its eventual enrollment under Verra’s Verified Carbon Standard was widely heralded as a conservation success. Furthermore, despite Rimba Raya’s size, we’re not aware of any high-profile exposés or academic studies that have pinpointed issues with the project’s design. The project also comes with strong co-benefits, such as the fact that it overlaps with both critical orangutan habitat and tropical peatlands that store vast quantities of carbon. In other words, this project seems well-intentioned and does not seem to involve any overt malfeasance.
Instead, the uncertainty hovering around Rimba Raya highlights just how vulnerable offsets are to human behavior. Human choices, whether crooked business dealings or as-yet-unclear government regulatory decisions, can threaten the global carbon market as surely as any fire.