A clash between pragmatism and purity is coming to a head

In many ways, it’s the Rudd government’s first carbon emissions trading scheme all over again – the famous clash between pragmatism and ideological purity when the Greens voted down climate policy for not going far enough. And it’s all coming to a head next week.

At issue is whether state governments should be able to earn carbon credits for protecting public forests, as the NSW government wants to do to support its proposed Great Koala National Park. A Nationals move to kill off the plan will come to a vote next Tuesday, with Bob Brown among those urging the Greens to join their old political foes. Other groups, not least the NSW Greens, say the plan must be allowed to go ahead.

The Greens are believed to have made their decision after an extremely close-run debate in the party room, and after negotiating with Labor to further lock in commitments not to sell the carbon credits to fossil fuel projects and tie the revenue to the park. The Greens’ position could be announced imminently.

The Australia Institute, which opposes the idea, is calling it “the Greens’ first major climate test in the Senate under leader Larissa Waters”. Tim Flannery, who supports the idea and also supported the Rudd-era carbon scheme, told The Australian Financial Review it’s imperfect, “but it is what it is, and you’ve got to live in the real world”.

Some are describing it as the most divisive issue in the environmental movement for decades. But it’s really a proxy war for a broader debate about carbon credits and the purpose of national parks.

Explaining next week’s vote is like unstacking a set of nesting dolls, from the global climate treaty, to the national policies that sit within it, to a state proposal for a national park.

First is the Paris Agreement, which obliges Australia to cut carbon emissions to net zero by 2050. Then there’s the federal government’s flagship climate policy, the Safeguard Mechanism, which caps the emissions of big polluters but allows them to achieve it by buying offsets known as Australian Carbon Credit Units (ACCUs).

Within that, the federal government has approved a NSW proposal to create ACCUs by protecting public forests, called the Improved Native Forest Management (INFM) method. The Nationals have moved a disallowance motion in the Senate and the Greens hold the balance of power.

Finally, there’s the proposed Great Koala National Park, which the NSW government says is conditional on it being a project that will earn carbon credits.

The environmental movement has been cleaved in two, not just the Greens.

Those who believe the Senate should kill off the INFM also include the Wilderness Society and Wilderness Australia, which includes former NSW environment minister Bob Debus and former Treasury official Virginia Young. Those who believe the Senate should not kill off the method include Greenpeace, WWF Australia, the NSW Nature Conservation Council, the NSW National Parks Association, Environment Victoria, North East Forest Alliance, South East Forest Alliance, the Australian Climate and Biodiversity Council (with former Treasury secretary Ken Henry and former Wilderness Society national director Lyndon Schneiders), various prominent ecologists such as Professor David Lindenmayer and Professor Hugh Possingham, the Aboriginal Advisory Panel for the Great Koala National Park (though not all Gumbaynggir people agree), and independent Senator Lidia Thorpe.

The Australian Conservation Foundation, led by former Greens leader Adam Bandt, has long opposed carbon offsets but is staying out of it for now and not lobbying senators either way.

The campaigning on both sides has been relentless and in this final week it is particularly frenzied, with competing campaigns in social and mainstream media and ferocious lobbying behind the scenes. On Monday supporters of the method rallied at Parliament House and ran a full-page ad in major newspapers raising the spectre of the Tasmanian tiger, which was protected 59 days before it became extinct.

On the other side, Juice Media has produced one of its “Australien government” parody videos, which echoes some of the talking points of the Australia Institute and thanks the think-tank in the credits.

The reason many environmentalists support carbon credits for forest protection is the same reason that the Nationals and the timber industry oppose it: they see it as a way to fund new national parks and end logging of native forests.

Former NSW National Parks and Wildlife Service head Atticus Fleming says ending all native logging in NSW would conservatively earn the state more than $1 billion over 15 years from carbon credits. There are already good reasons to protect forests, this adds another one.

So what are the arguments against it?

One of the most compelling criticisms focuses on the Great Koala National Park as a project, and whether it meets the test for “additionality” – the principle that credits should not be granted for activities that would have occurred anyway. Creating the park, or at least assessing the area, was a promise NSW Labor took to multiple elections.

Some are suggesting that the carbon credits plan was only mentioned for the first time when NSW Premier Chris Minns announced the park in September 2025. But it was long part of the deal. Minns has made numerous public statements linking carbon credits to the park since 2023, and this masthead reported it when the INFM method was submitted in 2024.

A year ago, NSW Environment Minister Penny Sharpe said if the carbon credits were killed off, the government would have to consider the best way to deliver a park. In other words, back to the drawing board. My read is that any park created without the carbon credits would be after the state election next March, and would probably be smaller with less funding. Minns is on record saying he was tempted to compromise on the size of the park to protect industry.

Another reason it passes the additionality test is that merely creating a national park is not enough to earn carbon credits. In the past, creating a new park has resulted in intensified logging elsewhere to meet wood supply contracts. The INFM requires a cessation of logging within the core area, a reduction in the surrounding area, and no increase anywhere in the state including on private land or imports from interstate or overseas. The main argument against this is that it could be difficult to enforce.

In any case, assessing the merits of the Great Koala National Park as an individual project is the remit of the Clean Energy Regulator. The question before the Senate is on the method, and it is bigger than one park. It could be used to create the Great Southern Forest National Park or by other logging states such as Queensland and Tasmania.

The next main line of attack is a proxy argument for the Safeguard Mechanism and ACCUs. The charge is that the scheme is trading koalas for coal – protecting forest so that industry can keep polluting. Instead, Australia needs to stop fossil fuel use and store carbon in trees.

There are good reasons to be sceptical about carbon offsets. The science of measuring the addition or removal of greenhouse gases from the atmosphere is imprecise. And the current policy is not providing much incentive for actual emissions cuts because the carbon credits are too cheap.

Yet, the Safeguard Mechanism remains the most credible climate policy actually on the table. Neither the government nor the opposition are contemplating alternatives such as a carbon tax or legislating an immediate end to fossil fuel exports.

Fortunately, we know why it is not working effectively – because millions of dodgy carbon offsets are artificially suppressing the carbon price. We know because ANU Professor Andrew Macintosh blew the whistle on junk credits, including the “human-induced regeneration” method, which is mostly farmers trying to grow trees in the desert, and the “avoided deforestation” method, where someone has a permit to cut down trees and doesn’t. You can no longer register new projects under these methods, but existing credits persist in the market and approved schemes will keep generating new credits for decades.

Guess what? Macintosh is the very person tasked with helping the NSW government design the INFM method. He closed the obvious loopholes. There are penalties if the government backtracks on protection at any point in the next century. There are provisions for bushfires. Some critics say all vegetation-based ACCUs are dodgy, but I’ll defer to Macintosh on this one.

NSW Greens representative Sue Higginson is no fan of carbon credits, but she says: “The most respected legal, ecological, and economic leaders in the environment movement recognise that this method is high integrity and will permanently protect forests.”

Greenpeace, a longstanding critic of carbon offsets globally, also says the method should be allowed to stand.

Regardless of the commitment not to sell credits to coal and gas projects, critics argue that increasing the supply will still make life easier for polluters.

That’s true, but not by much. Last financial year human-induced regeneration projects issued slightly more than 9.3 million credits, which was 40 per cent of the market. By comparison, INFM projects will issue 100,000-150,000 ACCUs on average for the next five years, Macintosh says, and will only ever be 0.5-5 per cent of the market.

“Even if [INFM] goes absolutely gangbusters and projects are registered wherever they can be registered, it will still be a relatively small proportion of the ACCU market,” Macintosh says. “If people are concerned about ACCUs, the focus should be on the big methods that matter most.”

The Safeguard Mechanism is undergoing a statutory review, and the government has signalled it is open to reform. Critics of ACCUs could focus their energy here.

If the Senate disallows the method, it will not improve the Safeguard Mechanism one jot. Higginson warns that the alternative could be worse, since the timber industry has its own ACCU method in the wings that would allow logging to continue.

The final main argument is that forests should be protected for their intrinsic value. That’s fine, but ideological purity will not serve the koalas and greater gliders that need protection now. And income that stays with the forest that generates it – as is promised for the koala park – can actually improve conservation outcomes.

If the carbon credits are killed off, it will be a great victory for the logging industry. For those who want to protect nature and climate, it will be a massive own goal.

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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.AdvertisementAdvertisement