Australia’s Forest Carbon Fight: Greens Split as Senate Backs Forest Credits

Australia has taken a major step toward using carbon credits to protect native forests. However, the decision has also exposed a deep split within the environmental movement.

The Senate has rejected an attempt to block the Improved Native Forest Management (INFM) method. This allows the new forest carbon credit system to remain in place.

The Greens were divided. Most of their senators supported the government’s position after securing changes to the scheme. Three Greens senators opposed it. The vote highlights a bigger question for Australia’s carbon market:

Can carbon credits help protect forests without allowing companies to rely on offsets instead of cutting their own emissions?

Australia’s Senate Clears a New Path for Forest Carbon

The Coalition tried to disallow the INFM method, arguing that it could affect Australia’s native forestry industry. The motion was defeated 34 votes to 27, allowing the method to continue.

Seven Greens senators supported the government, while Senators Nick McKim, Vanessa Bleyer and Jordon Steele-John voted against it.

The federal government says the method gives states another financial option for protecting public native forests. Under the system, states can generate Australian Carbon Credit Units (ACCUs) by stopping planned timber harvesting in eligible native forests.

The forests can then continue growing and storing carbon. At the same time, emissions linked to harvesting can be avoided.

The government formally approved the INFM method in June 2026. It is scheduled to expire on September 30, 2036, unless extended under Australian law.

How Forest Credits Work

The basic idea is simple. A state identifies a forest that would otherwise be harvested. If logging is stopped through an eligible project, the additional carbon stored in the forest can be counted as emissions reduction.

Projects must use Australia’s Full Carbon Accounting Model (FullCAM) to calculate the carbon benefit. They also face monitoring, reporting and compliance requirements.

The resulting ACCUs can be sold to companies seeking to offset emissions or meet obligations under Australia’s climate policies. For governments, this creates a potential new source of revenue from forest protection.

For environmental groups, however, the question is whether the carbon benefit is genuinely additional. That issue sits at the heart of the debate.

Why the Greens Are Divided

The Greens have long supported stronger forest protection and deeper emissions cuts. But the party remains divided over the role of carbon markets.

Most Greens senators backed the INFM method after negotiating changes with the government. Greens leader Larissa Waters said the party secured stronger safeguards, including restrictions on how credits can be used by coal and gas companies.

Energy Minister Chris Bowen said:

“If you believe in ending native forest logging or moving away from it and reducing it, then you vote for this method.”

Three Greens senators, however, rejected the deal.

McKim, Bleyer and Steele-John argued that carbon credits could allow major polluters to keep emitting while claiming reductions elsewhere. They also said native forests should be protected for their environmental and biodiversity value, rather than mainly because they can generate carbon credits.

Senator McKim noted:

“Labor is holding koalas hostage… and threatening their extinction unless they can profit from their habitat.”

The disagreement reflects a wider debate over whether forest conservation and carbon markets should be linked.

Supporters argue that carbon revenue can make standing forests more valuable than logging them. Critics say forests should be protected through direct government action, without creating credits that companies can use to offset emissions.

Great Koala National Park Could Become the Big Test

The proposed Great Koala National Park in New South Wales is likely to become one of the most important tests of the new system. The proposed park covers about 476,000 hectares, including more than 176,000 hectares of state forest.

The NSW government says the area could protect more than 12,000 koalas, 36,000 greater gliders and habitat for more than 100 other threatened species.

NSW is developing a carbon project under the new INFM method. The plan is to stop timber harvesting and allow the forests to continue growing and storing carbon.

Earlier government estimates suggested the project could generate about 6.4 million tonnes of carbon abatement and sequestration over 25 years, including around 3.7 million ACCUs over 15 years.

Those figures were based on an earlier version of the method. They should not be treated as the final credit volume.

The project will now provide an important real-world test of whether carbon finance can support large-scale forest protection.

Additionality Will Make or Break Forest Credits

The Senate vote does not end concerns about the quality of forest carbon credits. One major issue is additionality.

For a carbon credit to represent a real climate benefit, the protection should not have happened without the project. If a forest was already going to be protected, critics argue that issuing credits could create little additional climate benefit.

Another concern is leakage. If logging stops in one forest but moves to another area, some of the claimed emissions benefit could be lost.

The government considered both issues while developing the INFM method. The final rules include requirements to monitor harvesting and account for potential leakage.

The government received 371 submissions during consultation on the draft method. The results will now depend on how the rules work in actual projects.

A New Phase for Australia’s Carbon Market

The forest credit debate comes as Australia’s ACCU market plays a larger role in national climate policy. The credits are increasingly linked to the Safeguard Mechanism, which requires Australia’s largest industrial facilities to manage their emissions.

The policy continues to show positive momentum, with a noticeable reduction in industrial footprints during 2024–25. Total gross covered emissions decreased by 2.3% year-over-year to 132.8 MtCO₂e. Meanwhile, net emissions dropped at a faster rate of 5.5%, falling to 120.3 MtCO₂e, highlighting increased compliance and market activity.

Australia progress toward net zero — Source: Clean Energy Regulator

The Climate Change Authority’s latest review said the ACCU system remains fundamentally sound but called for improvements in transparency and information for buyers. It also recommended further work on carbon storage permanence and the treatment of credits from different project types.

The INFM method adds another potential source of ACCUs. Instead of planting new forests, projects can generate credits by keeping existing native forests standing and allowing them to grow.

That could expand Australia’s land-sector carbon market. But forest projects also face risks from fires, drought, pests and other disturbances. Ensuring that credited carbon remains stored will therefore be important for market credibility.

The Real Test: Can Australia Forest Credits Deliver?

Australia’s Senate decision does not settle the debate over forest carbon credits. It does, however, create a path for governments to put a financial value on keeping native forests standing.

The Great Koala National Park could become an early test. If its carbon project delivers real additional emissions reductions while protecting important biodiversity, it could show how carbon markets can support large-scale conservation.

But if credits are issued for protection that would have happened anyway, or if they allow major emitters to delay real emissions cuts, the method could face renewed criticism.

The next stage will, therefore, matter more than the Senate vote itself.

Australia now has to show that forest carbon can deliver both real climate benefits and real forest protection. How that works in New South Wales could influence the future of forest carbon projects across Australia.