Crypto News: An offsets rumble in the jungle

Today's newsletter looks at the fight for a share of a $1 trillion market in Borneo's jungle. You can read the full story on Bloomberg.com.

Also, keep up with the latest news on the wildfires ripping through the Los Angeles area. As of early Wednesday morning in California, the uncontrolled Palisades Fire had burned almost 3,000 acres, with strong winds hampering firefighting efforts. Read more here.

An offsets rumble in the jungle

By Sheryl Lee

You wouldn't expect it, but the mosquito-infested, muddy swamps of Central Kalimantan, Indonesia are ground zero for a fight over a $1 trillion financial market.

That's because it's home to one of the biggest carbon projects in the world. Called Rimba Raya, its peatlands and jungles span 36,000 hectares (139 square miles), or an area the size of Las Vegas. Apart from endangered wildlife, the land has another prized resource: meters-thick layers of peat underground, worth billions of dollars for its ability to store planet-warming carbon dioxide and generate carbon offsets.

The Rimba Raya site in Borneo alone has generated offsets that companies including Volkswagen AG to Gucci and McKinsey & Co. have used to claim they've canceled out a total of 26 million tons of emissions since 2013 — roughly equivalent to London's annual footprint.

As companies and countries look to buy more offsets like this to hit their green goals, the global market for these assets is projected to hit $1 trillion by 2050.

Which sparks some questions: Who's profiting from this trillion-dollar drive to save the planet? How hard is it to set up a project? Can anyone just buy a piece of land, make millions from offsets and retire early?

To find out, my colleague Faris Mokhtar and I spent a week in the swamps of Central Kalimantan. After dozens of mosquito bites, a surprising encounter with six orangutans and one shoe lost to the peatlands, we found people who could give us the answers we needed. In short we learned it's becoming much more difficult to make serious money in this. That's because everyone, from governments and private investors to villagers, is jostling for a slice of the profits.

The tropical forest bordering the Rimba Raya project is home to one of the world's last wild orangutan populations. Photographer: Muhammad Fadli for Bloomberg

Indonesia, host to some of the world's largest rainforests, sees offsets projects as a possible new source of public revenue. In 2023 the government revoked Rimba Raya's license — a move seen as part of efforts to re-distribute revenue in the sector. Its operator is now locked in a legal battle against the government to restore it.

It's not just Indonesia. As the offsets market grows, countries from Kenya to Malawi and Zimbabwe have implemented, or are preparing, legislation aimed at ensuring governments and local communities win a far greater share of potential profits.

For investors, government intervention could dampen the market. It's a "big risk," says Jos Cozijnsen, a carbon lawyer based in the Netherlands. "Beyond verifying reductions and transparency, the more you put political asks around offsets, the more lawsuits, the less investments."

At Muara Dua village, Rimba Raya's former employees miss their jobs; tree-planting, fire-patrolling and otherwise protecting the peatlands. The surge of global carbon offset fortunes have yet to wash onto the banks of the sleepy fishing village, and regulation could re-direct some of that flow. For now, though, activities are in limbo.

"Where the carbon credits are sold to, we don't understand," says 46-year-old Ruslan, a former worker. He's hoping operations resume soon. "As long as it is to do good, it is considered very good for myself and my friends in the village."

Read the full story on Bloomberg.com.

Poised for a comeback?

61%

This is how much the value of carbon credit sales in the voluntary market fell in 2023 on lower prices and weaker demand.

A piece of the climate action

"We are considered the lungs of the Earth. We need continued commitment to compensate the role of our forests in maintaining the global temperature."

Prabowo Subianto

President of Indonesia

Subianto spelled out his nation's plans to prosper from future sales of carbon credits at the G-20 summit in Brazil in November.

The Palisades Fire grows

By Mark Chediak, John Gittelsohn, and Mary Hui

Uncontrolled wildfires tore through parts of the Los Angeles region, fanned by extreme winds, forcing thousands of residents to flee and grounding firefighting aircraft.

The largest blaze — known as the Palisades Fire — roared across almost 3,000 acres just west of Santa Monica early Wednesday, while separate blazes exploded in size overnight. A fire in Eaton Canyon, near Altadena, has expanded to about 1,000 acres, while another grows northwest of LA. All are uncontained.

Firefighters battle flames during the Palisades Fire in the Pacific Palisades neighborhood of Los Angeles, California on Tuesday. Photographer: Kyle Grillot/Bloomberg

Mandatory evacuation orders have been expanded to parts of northern Santa Monica, with alerts covering a large swath of the coastal city warning that residents may need to leave. Widespread and damaging gusts are expected to worsen, hampering efforts to contain the flames.

The National Weather Service has in place a high wind warning through 6 p.m. Pacific time. Local media early Wednesday reported winds of as much as 99 miles (159 kilometers) per hour in some areas.

The NWS issued red flag warnings that extend from central California's coast to the US-Mexico border. Beverly Hills, Hollywood Hills, Malibu and the densely-populated San Fernando Valley are facing a "particularly dangerous situation" — the most severe fire alert level.

About 30,000 people were ordered to leave their homes on Tuesday after a brush fire erupted in the Pacific Palisades community, damaging homes and causing panic and traffic gridlock, with some abandoning their cars on narrow hillside roads.

The blazes come less than a month after a wildfire threatened Malibu, just west of Pacific Palisades. Malibu officials on Wednesday warned that residents should prepare to evacuate if conditions worsen.

Read more and get the latest updates on Bloomberg.com. For weather insights sent straight to your inbox, subscribe to the Weather Watch newsletter.

More from Green

Energy startups have overtaken the makers of electric cars and batteries as the top global climate tech investment for the first time since 2020. They've done so as the growing demand for artificial intelligence has driven interest in technologies that can power data centers with less emissions.

Venture funding for global energy startups totaled $9.4 billion last year, representing an increase of 12% from 2023 levels, according to a report published Tuesday by Sightline Climate, a market intelligence platform. Among them, funding for geothermal startups nearly tripled to $558 million, while nuclear investment almost doubled to $1.9 billion.

This comes as overall climate tech investment dipped in 2024, as venture capitalists remain cautious amid political uncertainty in the US, tough business environment and corporations weakening commitments to cut carbon. While global climate tech startups attracted a total of $30 billion in investment last year, that was 14% below 2023 levels. That follows a 24% drop in 2023. Sightline expects venture funding to remain at lower levels rather than increasing exponentially, which could endanger the world's ability to reach net zero.

However, "the dramatic drop in funding in 2023 wonʼt be repeated as the industry settles into a new normal," the researchers said.

States are charting a new road on cutting emissions. A handful of US states, led by Minnesota and Colorado, have enacted policies aimed at decarbonizing the transportation sector and getting people to drive less by curbing their departments of transportation's reliance on roadbuilding.

NYC condo owners need to make green upgrades. New York City residents, already grappling with some of the country's highest housing prices, face extra costs to comply with a law mandating greenhouse gas emission cuts at their buildings.

India's steel boom strains emissions-cutting plans. India's construction frenzy is driving up steel demand, leading to a surge in small-scale, polluting steel plants that use coal and low-grade iron ore.

Worth a listen

Science fiction writer Kim Stanley Robinson imagines the future for a living. And the future is very much upon us. Robinson's seminal 2020 novel Ministry for the Future opens in the year 2025. Robinson tells Akshat Rathi about how our real-life climate politics stack up against what he imagined for this era. They also discuss the dangers of science-fiction thinking in politics and why, for all his admiration of science and technology, Robinson remains so enamored with the unglamorous workings of a body like the United Nations. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.