Forests will be protected under a landmark new funding scheme under which the states will earn carbon credits to underwrite creation of new national parks, providing a pathway to end native forest logging on public land.
The approval of an Australian Carbon Credit Unit (ACCU) method for native forest management will be announced on Friday, paving the way for the NSW government to fulfil its election promise to create the Great Koala National Park before the state heads back to the polls in March 2027.
Assistant Minister for Climate Change and Energy Josh Wilson said the Improved Native Forest Management method would allow state governments the option to diversify management of forests by adding carbon sequestration projects to existing timber production and recreational uses of these forests.
“They can reinvest revenue generated from ACCUs into rural communities, and this new approach can open the door to new areas of sustainable economic activity like ecotourism and carbon land management,” Wilson said. “This is a voluntary option for state governments to diversify their regional economies. The Commonwealth has no plans to end logging.”
Queensland and Tasmania, the only other states with active public forestry operations, are also eligible, but the conservative governments in those states have ruled out using carbon credits to reduce native forestry because of the impact on regional jobs.
Victoria and Western Australia will miss out because they already ended their state logging industries in 2024, and projects must be new to be eligible to earn credits, while South Australia has not had public native forestry for decades.
ACCUs are carbon credits bought by the Australian government to help meet national emissions reductions targets under net zero accounting, big polluters who must buy them under the Safeguard Mechanism, as well as some companies that buy them voluntarily to claim “carbon-neutral” status.
The NSW government proposed a carbon credit for reducing native forest logging in 2024, but the newly approved scheme has been significantly strengthened. The original proposal would have allowed state governments to earn credits for deferring timber harvesting, but the final scheme says logging within the protected area must cease permanently and contains provisions that force the states to repay credits if they backtrack within 100 years.
The project area must also include adjoining land where logging is reduced by at least 20 per cent. There are also leakage clauses, providing penalties if logging of public forest increased elsewhere in the state on private or public land, or if there is an increase in imports of unsustainable timber.
If an area is hit by a bushfire, the state will get a discounted rate until they can restore the forest.
There has been debate over how much the ACCU scheme in general is creating additional abatement, with scientists from ANU and UNSW in 2024 publishing critical findings about carbon farming on rangeland where farmers are paid to reduce stock and allow trees to regrow, and a number of companies distancing themselves from voluntarily buying credits to focus more on direct emissions cuts.
Janet Hallows, director of climate programs and nature-based solutions at the Climate Market Institute, the peak body for both buyers and sellers of ACCUs, said the final method was rigorous. “They’ve obviously integrated some of the feedback from the stakeholder consultation process, so really demonstrating good practice policy design,” Hallows said.
Dr Ken Henry, former Treasury secretary and chair of the Australian Climate and Biodiversity Foundation, said it was a “high integrity process” and the final method looked “very good”.
NSW Environment Minister Penny Sharpe confirmed the state would proceed to register a carbon project for the Great Koala National Park, and the creation of the reserve was conditional upon the successful registration of the project.
“This method will deliver tangible benefits for regional communities by creating diversified revenue streams and supporting new employment opportunities managing forests for their carbon values,” Sharpe said. “The creation of the Great Koala National Park will see 100 additional national park roles created on the North Coast.”
Some critics of the park have argued that it should not qualify as additional abatement given that it has been Labor policy to create the Great Koala National Park for more than a decade, and the government announced the proposed boundaries and a moratorium on timber harvesting were announced last September.
However, the letter from the committee to Wilson recommending endorsement of the method says it is reasonable for a state government to pursue an ACCU scheme as a means of fulfilling an election commitment and a moratorium while examining the feasibility of the project, while a well-designed method would ensure the longevity of the protection.
Henry said the carbon credit method could be used to exit an unsustainable industry.
“The Great Koala National Park is 176,000 hectares, but Forestry Corporation of NSW manages about 2 million hectares of native forest,” Henry said.
“There is the opportunity here for the NSW government to have the entire forest estate managed for carbon and related uses, including bushfire resilience, rather than have the estate continue to be managed for native forest logging incurring larger and larger losses, which have to be covered by the NSW taxpayer year after year.
“Everybody knows it’s a declining sector and we have to do something fairly significant in order to rescue jobs in the sector.”
In NSW, native forest logging continues in state forests surrounding the new park and in other parts of the state such as the South Coast. Sharpe said the government was working on a Forestry Industry Action Plan to “outline a pathway to ensure a sustainable forestry industry that is aligned with the government’s environmental and economic priorities”.
“It will consider the future of hardwoods including the growing role of plantations, softwood products, and new opportunities in engineered timber and alternative fibres,” Sharpe said.
The Australian Forest Products Association on behalf of the timber industry was among those stakeholders briefed before Friday’s announcement. Spokesman James Jooste said the move was “completely anti-business” and there was no evidence it would have any environmental benefit over sustainable management by the forestry sector.
He said the anti-leakage provisions would be hard to enforce, pointing to the current Senate inquiry examining evidence of imports of Russian and Belarusian timber.
“It has the potential to completely gut regional communities and completely decrease the supply of an incredibly critical and valuable material that we use right across our economy,” Jooste said.
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Caitlin Fitzsimmons is the environment and climate reporter for The Sydney Morning Herald. She was previously the social affairs reporter and the Money editor.Connect via email.From our partners
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