In the heart of East Kalimantan lies the Rimbo Paitan forest concession, billed as Indonesia’s emblematic carbon market venture. Regrettably, it has morphed into a breeding ground for a credibility quandary, as the carbon trading commenced.
PT Rimba Raya Conservation, the project architect, posits that its forest management will avert 25 million tonnes of peat-fire emissions over three decades. This assumption-based prediction is under scrutiny. Greenpeace Indonesia asserts that this projection bears little resemblance to the current zoning maps.
The Ministry of Environment and Forestry designated Rimbo Paitan as a “protection forest” in 2019, a classification that prohibits plantation licenses. Critics contend that the threat of conversion, a prerequisite for the carbon market’s credibility, ceased to exist five years prior to the market’s inception.
Tata Mustafa, climate policy lead at the Indonesian Forum for the Environment (Walhi), puts it succinctly: “Once the government has ruled out conversion, the threat is no longer credible, so any credit issued is selling illusory emissions reduction.” Laksmi Dhewanthi, the ministry’s director-general of climate control, offers a direct response. She explains that the reference level was based on 2018 data, prior to the reclassification, ensuring compliance with the 2022 carbon-exchange decree. The legal framework, according to her interpretation, freezes the baseline at the time of calculation, not at the time of trading.
This legal defense does not appease the market’s buyers. On its launch day, 11 March 2025, the Indonesia Stock Exchange showcased 33 projects offering 1.8 million tonnes of carbon dioxide equivalents.
A total of 462,000 tonnes of deals were logged, signifying a 26 percent take-up. The average price was USD 6.40 per tonne. This price discount suggests that buyers had already factored in risk.
Approximately half of the listed offsets face the same kind of baseline questions as Rimbo Paitan, according to environmental groups. Inflated baselines give rise to “ghost credits” — offsets that represent no real emission reduction.
If the forest was never at risk of being cleared, preventing its clearing does not constitute a climate advantage. Instead, it amounts to a bookkeeping trick. The stakes are high, as Indonesia’s 2060 net-zero commitment hinges on the carbon market functioning as a genuine tool, not a public relations exercise.
With vast forests and geothermal reserves at its disposal, Indonesia’s President Joko “Jokowi” Widodo envisioned turning these resources into tradeable emission credits when he signed the carbon-exchange regulations in 2022. However, a market constructed on contested baselines does not attract serious capital.
Instead, it attracts speculators and reputational risk.
