* Likely to be first fully validated REDD project under VCS
* Approval of methodology boost for REDD projects
By David Fogarty and Sunanda Creagh
SINGAPORE/JAKARTA, Aug 24 (Reuters) - An Indonesian project aimed at saving a vast tract of rainforest has past a milestone seen as a boost in the development of a global market in forest carbon credits.
That market under the U.N.-backed scheme reducing emissions from deforestation and degradation (REDD) could eventually be worth billions of dollars annually and is central to the goal of driving private sector involvement in forest protection.
The Rimba Raya conservation project covers nearly 100,000 ha (250,000 acres) of carbon-rich peat swamp forest in the province of Central Kalimantan on Borneo island. Forests soak up large amounts of carbon dioxide and scientists say curbing deforestation is a key way to fight climate change.
The project has earned the first-ever approval of an accounting method for measuring the reduction in carbon emissions under REDD and is being developed by InfiniteEARTH, with funding from Shell (RDSa.L), Gazprom Market and Trading (GAZP.MM) and the Clinton Foundation.
The Voluntary Carbon Standard programme, the most respected standard for voluntary carbon offsets, approved the methodology after it passed a mandated double auditing process.
The project itself is now undergoing third-party validation and is likely to become the world's first VCS-approved REDD project later this year, Gazprom and InfiniteEARTH say.
The step is a boost for other REDD projects and investors wanting certainty on the quality of REDD carbon credits. There are several dozen REDD projects globally, including more than a dozen in Indonesia at various stages of development.
"This is seen as a landmark moment for the carbon market," Gazprom said in a statement. "Historically REDD projects have suffered due to their exclusion from the Kyoto Protocol," it said, as well as the absence of a recognised global standard.
The project is expected to reduce 18.5 million tonnes of carbon dioxide from being emitted in the first 10 years and up to 75 million tonnes in the 30-year life of the project.
At about $10 a credit, that means about $750 million over 30 years.
The future sale of carbon offsets from the project will help boost the livelihoods of more than 11,000 people in the area and save rare species including orang-utans and other primates, the statement says.
REDD aims to reward developing countries that save, protect and rehabilitate forests through large-scale projects. Poorer nations and local forest communities are meant to take a major share of the sale of the carbon credits to rich nations, which can use them to meet mandated emission reduction targets.
REDD is not yet formally part of a broader U.N. climate pact and potential buyers of the credits have been waiting for an approved global standard for forest CO2 credits to ensure the reductions are real and verifiable.
"The methodology was designed for conservation projects that avoid planned land-use conversion in tropical peat swamp forests in Southeast Asia," the statement said.
The project itself borders Tanjung Puting national park and the area has been under growing threat from encroaching palm oil plantations.
"It shows small-scale REDD can be done. This is also demonstrating the ability of project-based activities, that they can do that," Daniel Murdiyarso, senior scientist at Centre for International Forestry Research (CIFOR), told Reuters on Tuesday. (Editing by Sue Thomas)