The Federal Government has elevated climate change to a high policy priority. Reducing emissions from the use of fossil fuels attracts much of the attention, and rightly so. However, emissions from forestry account for about 17.5 per cent of global emissions (Intergovernmental Panel on Climate Change 2007). Therefore, changes to land use and management in native forests hold opportunities for significant immediate and prospective reductions in CO₂ emissions, along with the potential for further sequestration over coming decades. Australia’s plantation reality makes the realisation of these native-forest opportunities appealing, both economically and environmentally.

Once again, gaps in data frustrate policymaking. The Australian Greenhouse Office (AGO) generates valuable information and analysis in many areas but much greater attention is required on the native-forest front. Crucially, the AGO does not report the annual emissions from native-forest logging: emissions are reported net of native-forest sequestration. Using AGO data, Blakers (2008: 4) estimates that logging native forests generates an estimated 38 million tonnes of CO₂-e (carbon dioxide equivalent) annually, equivalent to 7 per cent of Australia’s total net greenhouse-gas emissions. Combined with the estimated 11 to 13 per cent contribution of native-forest clearing to Australia’s net emissions over 2005 and 2006 (Australian National Greenhouse Accounts), deforestation and native forest degradation from logging accounts for emissions equivalent to 20 per cent of Australia’s annual net greenhouse-gas emissions.

Existing high-density carbon stores, especially mature native forests, cannot be substituted: there is not enough land or water to enable regrowing vegetation to recapture the emitted carbon in a policy-relevant timeframe. From a climate-mitigation perspective, significant emissions can be avoided by giving priority to protecting the stores of carbon in existing native vegetation, especially mature and old forests with their large carbon-dense trees (Roxburgh et al. 2006), by removing them from wood production and allowing them to regrow. As demonstrated in the first sections of the paper, it is now possible for existing plantation resources to substitute for virtually all the forgone wood.

Scientific investigation into the carbon stocks and storage potential of Australia’s native forests is now coming to fruition. Mackey et al. (2008) investigated the carbon-carrying capacity of 14.5 million hectares of south-east Australian eucalypt native forests (Southern Queensland, NSW, Victoria and Tasmania), about half of Australia’s remaining eucalypt native forests. They estimated their average total carbon-carrying capacity to be 640 tonnes of carbon per hectare. Given this, they estimated that these forests in their natural condition have the potential to store some 33 billion tonnes of CO₂-e.^[5] About 56 per cent of the study area has been logged and is therefore below carbon-carrying capacity. Given that previous studies have suggested that carbon stocks in logged forests can be around 40 per cent below their carbon-carrying capacity (Roxburgh et al. 2006), the carbon sequestration potential of these forests could be as much as 7.5 billion tonnes of CO₂-e. While further analyses are needed, this estimate is sufficient to highlight the order of magnitude impact on Australia’s carbon accounts if logging was halted in these south-east Australian native forests, thereby enabling them to regrow their carbon stocks towards their natural carbon-carrying capacity.

Using the equivalence factor developed by Costa & Wilson (2000) to facilitate the assessment of sequestration-based land-use projects, the sequestration potential of halting logging in Australia’s south-east native forests is estimated to be equivalent to avoiding emissions of 136 million tonnes of CO₂-e per year for the next 100 years (Mackey et al. 2008: 38): an annual rate of emissions equivalent to 24 per cent of Australia’s net greenhouse-gas emissions from all sectors in 2006.

The Australian Government adopts the Kyoto Protocol carbon accounting framework in its Carbon Pollution Reduction Scheme Green Paper (2008). This framework ignores native-forest logging emissions and sequestration opportunities from shifting wood production from carbon-dense native forests to less carbon-dense plantations. The Government proposes not to include native forests in Australia’s emissions trading scheme. Although not advanced in the Government’s Green Paper, two arguments support this decision. First, because an emissions trading system works on flows, it is difficult to provide a continuing income stream for the permanent protection of the stocks of carbon in native forests. Secondly, because an emissions trading system treats carbon as a homogeneous commodity, it does not distinguish between carbon stored in a tree crop and carbon stored in a significantly more resilient bio-diverse native-forest ecosystem; nor does it recognise the longer residency time of carbon in the various pools of a native forest, the age of the forest, and therefore the time needed to recover CO₂ emitted from degradation of the carbon stores by logging.

However, given the significance of native forests in Australia’s carbon story, excluding them from our climate-change challenge is untenable. Exclusion would increase the cost burden on other greenhouse-gas polluting companies forced to pull their weight. It would also advantage companies processing native-forest wood into sawn timber, pulp, paper and other wood products, including biofuels, since neither their associated biomass carbon emissions nor the lost native-forest sequestration opportunities would be costed.

Incorporating native forests in Australia’s climate-change challenge is best done outside the emissions trading system and linked to a much-needed review of forestry-industry policy to capitalise on Australia’s plantation resources. From a climate-change perspective, the task is to secure funding for the permanent protection of native forests (and other self-regenerating natural terrestrial ecosystems) for carbon storage, together with water and biodiversity conservation. A government body tasked with this job staffed by people knowledgeable in this field could set the priorities and build the strategies. Its funding could be multi-sourced (including redirection of government taxation support for ‘carbon sink forests’ and a proportion of government funding for land management), setting aside a fixed part of revenue from emissions-trading permit sales or trades and private/voluntary contributions.

In its Green Paper, the Government proposes that plantations established since 1990 on previously cleared land — and therefore in accordance with the Kyoto Protocol — be included in Australia’s emissions trading scheme as an opportunity to generate offset credits within the forestry industry, on a voluntary basis (Australian Government 2008: 132). Relative to protecting native forests — from deforestation and degradation — and restoring native vegetation ecosystems, plantations are a high-cost and high-risk CO₂ mitigation option. For plantations to achieve the same sequestration benefit as halting logging in the native-forest study area investigated by Mackey et al. (2008: 38) requires a conservatively estimated additional 4 million hectares of plantations, at a cost of $18 billion ($35 billion if established through managed investment schemes).^[6] Plantations, being production systems, lose most of their stored carbon on harvest or in short-lived products. Not being self-sustaining agricultural systems, they also embody higher management costs (which also generate emissions) and higher risks associated with disease, drought, wind damage and fire (see, for example, Munishi & Chamshama 1994; Perera 1989). Relative to permanently protected, self-regenerating natural ecosystems, plantations are an inefficient carbon-sequestration system. However, because of this inefficiency, plantations are a significantly more climate-friendly way of meeting our wood needs than logging native forests. The CO₂ recapture time for plantation wood may be from one to a few decades, depending on the age of the plantation when logged, while the recapture time for native-forest wood is many decades longer, again depending on the age when logged.

By including plantations in its proposed emissions trading scheme — but not native forests — the Government will create counter-productive market signals for climate-change mitigation and forestry-industry productivity. Perhaps unwittingly, it proposes to reward investment in an inferior sequestration strategy (plantations) and handicap the economically superior plantation-processing industry relative to its native-forest-based competitors whose emissions will not be costed. The result may be perverse in two ways. First, emissions are likely to be higher overall, as logging is redirected into native forests where emissions liabilities do not apply. Secondly, wood supply for plantation processors may become too expensive as wood-growing competes with carbon-growing and the value of carbon rises (Wood & Ajani 2008).

This outcome could be avoided with a structural adjustment package to complete the forestry industry’s plantation transition — particularly in the hardwood-chip sector — combined with directing the task of biomass sequestration to self-regenerating natural ecosystems managed under a new institution, as discussed earlier. In this policy frame, wood supply remains the objective of plantation investment. With fossil fuels covered in an emissions trading scheme and carbon sequestered in plantation biomass cancelling out emissions over a rotation, the plantation industry has grounds for arguing its raw material be excluded from emissions trading. If granted, the associated compliance costs evaporate.