How an Indonesian Pulp Giant Built a Carbon Project to Save a Forest From Itself

Why It Matters

If the baseline is inflated, the RER credits may represent ‘junk’ carbon, undermining Indonesia’s credibility in global carbon markets and allowing continued deforestation under a veneer of sustainability.

Key Takeaways

• APRIL invested $100 million in 130,000‑ha restoration.
• Project claims to avoid 373 million t CO₂e, worth $2.6 billion.
• Baseline assumes 100% deforestation, likely overstated.
• Regulations already limited peatland conversion before project.
• Verra audit found 24 issues, baseline unchanged.

Pulse Analysis

Indonesia’s push to monetize its forest carbon potential has accelerated after the Ministry of Environment signed a Mutual Recognition Agreement with Verra, opening the door for projects like the Riau Ecosystem Restoration (RER). APRIL Group, a major pulp producer, poured $100 million into converting four idle timber concessions into a 130,000‑hectare restoration zone, touting an avoidance of 373 million tons of CO₂e and a market value of $2.6 billion. The narrative positions the project as a flagship of high‑integrity carbon finance, aligning with the country’s ambition to generate green jobs and sustainable livelihoods.

However, the project's baseline methodology raises red flags. By assuming a 100% likelihood of conversion to industrial pulp plantations, RER inflates the projected deforestation rate, despite recent satellite data showing annual forest loss in the Kampar Peninsula has fallen to a few thousand hectares and even 249 ha in 2020. Existing policies—a 2011 moratorium on high‑carbon‑stock plantations, a 2017 peat‑restoration mandate, and inclusion of the concessions in a protective map—already constrained large‑scale clearing before RER began. This discrepancy suggests the credits may not be truly additional, challenging the integrity of the voluntary carbon market.

The broader implications are significant for investors and policymakers. Overstated baselines can generate “junk” credits, eroding confidence in carbon markets and allowing corporations like APRIL to offset emissions elsewhere while continuing deforestation in regions such as Kalimantan. Critics call for dynamic, ex‑post baselines and stricter audit independence to prevent greenwashing. Strengthening verification standards and ensuring that protective regulations are factored into baseline calculations are essential steps to safeguard the credibility of Indonesia’s emerging carbon finance sector.