NSW government to use new carbon credit scheme to fund forest protection and end logging
Forests will be protected under a groundbreaking new financing plan under which states will earn carbon credits to enable the creation of new national parks and provide a path to end native forest logging on public lands.
Approval of the Australian Carbon Credit Unit (ACCU) method of native forest management will be announced on Friday, paving the way for the NSW government to fulfill its election promise to create the Great Koala National Park before the state goes to the polls in March 2027.
Assistant Secretary for Climate Change and Energy Josh Wilson said the Enhanced Native Forest Management method will give state governments the option to diversify forest management by adding carbon capture projects to existing timber production and recreational uses of these forests.
“They can reinvest income from ACCUs into rural communities, and this new approach can open the door to new areas of sustainable economic activity, such as 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, other states with active public forestry operations, are also eligible for this program, but conservative governments in these states have refused to use carbon credits to reduce native forestry due to the impact on regional employment.
Victoria and Western Australia will miss this opportunity because they ended their state logging industries in 2024 and projects must be new to qualify for credit, while South Australia has had no public native forestry for decades.
ACCUs are carbon credits purchased by the Australian government to help meet national emissions reduction targets under net zero accounting, with major polluters required to purchase them under the Conservation Mechanism as well as some companies purchasing them voluntarily to claim “carbon neutral” status.
The NSW government has proposed a carbon credit to reduce native forest logging in 2024 but the newly approved plan has been significantly strengthened. The original proposal would have allowed state governments to earn credits by delaying timber harvesting, but the latest plan says logging in the protected area must stop permanently and includes provisions forcing states to repay the loans if they back out within 100 years.
The project area must also include adjacent land where logging has been reduced by at least 20 percent. There are also leakage clauses that provide penalties for the logging of public forests on private or public land anywhere in the state or an increase in unsustainable timber imports.
If an area suffers a forest fire, the state will receive a discounted rate until it can regenerate the forest.
There has been debate over how much additional reductions the ACCU scheme creates overall, with scientists from ANU and UNSW publishing critical findings in 2024 about carbon farming on rangelands, where farmers are paid to reduce stocks and allow trees to regrow, and some companies moving away from voluntarily buying credits to focus more on direct emissions cuts.
The final method is rigorous, said Janet Hallows, director of climate programs and nature-based solutions at the Climate Market Institute, the peak organization for both buyers and sellers of ACCUs. “They clearly integrated some of the feedback from the stakeholder consultation process, which suggests that the policy design is really good practice,” Hallows said.
Former Treasury minister and president of the Australian Climate and Biodiversity Foundation, Dr. Ken Henry said it was a “high integrity process” and the final method looked “very good”.
NSW Environment Minister Penny Sharpe has confirmed the state will continue to register a carbon project for the Great Koala National Park and the creation of the reserve is contingent on the project being successfully registered.
“This method will deliver tangible benefits to regional communities by creating diversified income streams and supporting new employment opportunities managing forests based on their carbon values,” Sharpe said. “The creation of the Great Koala National Park will enable the creation of 100 additional national park roles on the North Coast.”
Some critics of the park have argued that it should not qualify as a further mitigation, given that it has been Labor’s policy to create the Great Koala National Park for over a decade, and given that the government announced proposed boundaries and a moratorium on timber harvesting was announced last September.
However, the committee’s letter to Wilson recommending approval of the method states that it is reasonable for a state government to pursue an ACCU plan as a means of meeting an election commitment and a moratorium while examining the feasibility of the project, while a well-designed method will ensure the longevity of protection.
Henry said carbon credits could be used to exit an unsustainable industry.
“The Great Koala National Park is 176,000 hectares, but the NSW Forestry Agency manages approximately 2 million hectares of native forest,” Henry said.
“There is an opportunity here for the NSW government to manage the entirety of forest land for carbon and related uses, including bushfire resilience, rather than the land continuing to be managed for native forest logging, leading to greater losses that must be borne by NSW taxpayers with each passing year.
“Everyone knows this is an industry in decline and we need to do something pretty significant to save jobs in the industry.”
In NSW, native forest logging continues in the 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 Sector Action Plan to “outline a path forward to ensure a sustainable forestry industry that is aligned with the government’s environmental and economic priorities”.
“The growing role of the plans will consider the future of hardwoods, including 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 stakeholders notified ahead of Friday’s announcement. Spokesperson James Jooste said the move was “completely counter-business” and there was no evidence it would provide any environmental benefits compared to sustainable management of the forestry sector.
Anti-leakage provisions would be difficult to enforce, he said, pointing to the current Senate investigation examining evidence of timber imports from Russia and Belarus.
“It has the potential to completely decimate regional communities and completely reduce the supply of an incredibly critical and valuable material we use in our economy,” Jooste said.
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Caitlin Fitzsimmons is the environment and climate correspondent for The Sydney Morning Herald. He was previously a social affairs reporter and Money editor.Connect via email.
