Q&A with Jeffrey Chatellier, CEO of Forest Carbon

This is the fifth interview in our series of Q&A’s where we speak to some of the founders and CEO's of companies we invest in as part of our Natural Capital Strategy. You can read the other Q&As here. 

Q: What does Forest Carbon do?

Forest Carbon develops and manages large-scale forest conservation and restoration projects in Indonesia. We generate high-quality carbon credits, alongside measurable biodiversity and community benefits, by protecting and restoring tropical forests at scale.

Q: What is the outlook for the carbon markets you operate in?

The outlook is very positive, particularly from a South-East Asian perspective. We’re now seeing structural demand emerge from compliance markets in Singapore and Japan.

Singapore has introduced a carbon tax — currently around USD 35 (SGD 45) per tonne and rising — and allows companies to cover 5% of their exposure using approved international credits¹. That effectively creates an export market for high-quality credits from countries like Indonesia.

Japan’s bilateral compliance framework, the Joint Crediting Mechanism (JCM) has recently been strengthened through a mutual recognition agreement with Indonesia². This means Indonesian carbon credits can be recognised by Japan for compliance purposes under a bilateral system. The JCM spans 29 partner countries and includes around 90 registered projects, with over 250 projects supported overall, reflecting growing policy backing from the Japanese government³. This convergence of voluntary and compliance markets has the potential to create long-term, predictable demand for nature-based credits.

Q: Where are the buyers of your credits today, and how is that changing?

Most of our buyers currently come from Europe through the voluntary market. Demand there is growing, driven by consumer-facing companies with deforestation-free commitments and Scope 3 climate targets. Many are developing “insetting” programs — investing directly into nature within their own supply chains.⁴

EU regulatory developments, such as the new Deforestation Regulation, also push companies to prove traceability to farm level. We see this laying the groundwork for future biodiversity and nature markets.⁵

Q: How does the regulatory environment in Indonesia affect your business outlook?

Indonesia has over 110 million hectares of forest estate⁶, so the conservation opportunity is immense. For several years, the government imposed a moratorium on carbon trading, which slowed the sector.

Just ahead of COP, a presidential decree lifted that moratorium and formally opened Indonesia’s carbon markets for international investment.⁷ This is a major milestone. It gives us a blue-sky runway to expand our project portfolio and contribute to Indonesia’s ambitious restoration and conservation goals.

Q: What milestones has Forest Carbon achieved recently?

We expanded our managed portfolio to just over 250,000 hectares across Sumatra, Kalimantan and Papua. We also launched a village forest project with indigenous communities as part of a long-term insetting partnership with a major European consumer goods company. That partnership includes a multi-year offtake agreement, giving us long-term revenue visibility.

Q: How do you think about debt versus equity when scaling?

We began with a 23,000-hectare project that proved the model could deliver returns for investors, local communities and the state. Our ambition is now to scale to 1 million hectares — comparable to the largest industrial forestry operations in Indonesia, but with restoration and conservation at the core. To reach that scale, we need blended finance: strategic equity plus long-term debt. BNP has supported us on both fronts.

Q: What do your future financing needs look like?

We’re building a debt facility with BNP to accelerate development of our existing projects now that regulatory barriers have been removed. Over the next 12 months, we plan to raise between USD 30 to 50 million in project finance.

Q: What do you look for in a financing partner?

Alignment on values and safeguards is essential. Our buyers care not only about the quality of our credits but also about who our investors are — because that influences their confidence in long-term project delivery.

We also look for investors who understand environmental markets. BNPP AM Alts’ Natural Capital team has helped us strengthen due diligence, refine investment decisions and attract additional Indonesian private equity investors.

Q: Have private market investors provided advantages over traditional financiers?

Yes. Environmental markets remain nascent, and many traditional lenders lack the experience to assess project risks. Even with CEO-level interest, lending teams often struggled to progress. Investors with specialised teams, like BNP, who have already backed nature-focused projects, understand the sector. Their involvement created a “trust dividend”, signalling to the market that we’d passed rigorous due diligence and enabling us to attract further capital.

Q: How do you plan to finance future land acquisitions and expansion?

Alongside blended debt and equity, we are close to finalising a long-term multi-million environmental markets contract with a major European company for our new project sites.  This revenue will underpin further expansion, though details will be announced in due course.

Q: How do you measure social and biodiversity outcomes alongside carbon, and how do they add value?

Nature-based solutions have always rested on three pillars: climate mitigation, biodiversity and community impact.⁸ Community outcomes are especially critical — projects fail without local support. We focus on creating local “social fences” by generating economic opportunities.⁹ Our policies prioritise local hiring, and we invest in adult education so community members can earn qualifications required for permanent roles. We also fund practical interventions — such as rainwater catchment systems — to improve health and reduce household costs.

We’re building robust MRV (Measurement, Reporting and Verification) systems not only for carbon but also for livelihoods and biodiversity metrics as buyers increasingly want evidence of impact across all three pillars. 

Q: Are buyers willing to pay more for high-quality credits?

Yes. Buyers care deeply about impact and will pay a premium where the credits demonstrate strong climate integrity, measurable biodiversity gains and clear community benefits. Insetting partners pay an additional premium when projects sit within their supply chains.

Q: What signals do you see that the market is maturing?

Major development banks — including IFC, Proparco and the German Investment Corporation (DEG) — are now entering the sector. Specialised natural capital funds, such as BNP’s, have paved the way for this evolution. This mainstreaming is critical for mobilising the scale of capital required globally

Q: What are Forest Carbon’s objectives for the next year?

We want to grow from 250,000 hectares to the path towards 1 million hectares under our management. Having demonstrated that we can restore 23,000 hectares, an area three and a half times the size of Manhattan, we now aim to replicate that success at a national scale.

Indonesia’s forestry estate is vast, and protecting it will require major capital inflows and many more participants. Our goal is to help lead that transition by building models that attract investment, deliver community benefits and show that conservation can operate at the same scale as extractive industries.