Forests NSW – a leader in carbon trading

Forests NSW understands the important role forests and wood products can play in reducing the levels of carbon dioxide in our atmosphere and mitigating climate change. In fact in 2005 we became the first in the world to trade forest-based carbon credits within a registered carbon trading scheme.

Carbon credits and permits

'Carbon credit' is a generic term used to describe a specified unit of reduction or absorption of carbon relative to the normal way of doing things.

1 carbon credit = 1 tonne reduction/absorption of carbon dioxide (CO₂)

In NSW, carbon credits from eligible forests may be created by accredited entities under the NSW Greenhouse Gas Reduction Scheme. Known as NSW Greenhouse Gas Abatement Certificates (NGACs), carbon credits can be sold or traded to other companies wishing to offset their greenhouse gas emissions.

In 2010 the Australian Government is proposing to introduce a national emissions trading scheme that will replace the NSW Greenhouse Gas Reduction Scheme. The scheme, known as the Carbon Pollution Reduction Scheme, will establish a national market for greenhouse gas emissions.

Carbon permits will form the basic unit of compliance and trade in the Carbon Pollution Reduction Scheme. A carbon pollution permit will be known as an 'Australian emissions unit' (AEU).

1 carbon permit = 1 Australian emissions unit = permission to emit 1 tonne of carbon dioxide (CO₂) or equivalent

Forests eligible for carbon trading

In Australia, 'reforestation' is the only type of forest that is currently eligible for carbon trading. 'Reforestation' is defined as the direct human-induced conversion of land that was clear of forest at 31 December 1989, to forest land.

About 10% of Forests NSW plantations currently meet the definition of reforestation and have been accredited as eligible carbon forest from which abatement certificates can be created and traded. The first batch of these certificates was sold for over $1 million to Energy Australia to help offset greenhouse gases released into the atmosphere as a result of electricity use in NSW.

Carbon accounting system

Forests NSW has been at the forefront of innovation in carbon accounting, developing a robust carbon accounting system, and we have played a pivotal role in developing state, national and international guidelines to enable carbon accounting and trading. Since 2005 Forests NSW has registered nearly two million carbon credits (certificates).

With  the introduction of the Carbon Pollution Reduction Scheme, it is proposed that emissions and removals resulting from land use management and change will be estimated using a nationally prescribed methodology, e.g. the National Carbon Accounting Toolbox.

Key links

• NSW Greenhouse Gas Reduction Scheme (www.greenhousegas.nsw.gov.au)
• Carbon Pollution Reduction Scheme (www.climatechange.gov.au)
• National Carbon Accounting Toolbox (www.climatechange.gov.au)