Climate Change and Forests

Bill McCormick
Fred Cook
Science, Technology, Environment and Resources Section

Forest and Climate initiative

The Government announced on 29 March 2007 that it would provide $200 million over five years for the Global Initiative on Forests and Climate[1]. The Initiative aims to reduce greenhouse gas emissions by protecting existing forests and promoting sustainable forestry practices and reafforestation.

Other countries will be encouraged to contribute to projects under the Initiative. The USA and Indonesia have agreed to work with Australia on this initiative, but no detail of the level of financial contribution by either country has been released.

Green groups welcomed the initiative but criticised aspects of what the proposal does not do. Australian Conservation Foundation Director, Don Henry said the Government should do more to stop the bulldozing of native vegetation in Australia.[2] Greenpeace campaign director, Stephen Campbell raised the issue of Australia not banning the importation of illegally logged timber when he said:

The problem of illegal logging in our region is massive. In Papua New Guinea and Indonesia there is ingrained corruption at all levels of the industry and within government. While it is important to combat illegal logging in our region, the Australian Government should live up to promises made in 2004 and pass strong legislation to prevent illegal timber from entering Australia.[3]

Table 1 Funding of the Global Initiative on Forest and Climate







Amount ($m)






Source: Budget Paper No.2 Budget Measures 2007-08[4]

The Budget papers indicate that $164.5 million of the Global Initiative on Forests and Climate funding will be delivered through AusAid in both existing programmes and new programmes, principally in South-East Asia and the Pacific Islands, especially Indonesia and Papua New Guinea. An important aspect is the satellite monitoring and assessment of forests and a $7 million satellite receiving station will be established in northern Australia to assist this function. The projects are intended to:

  • build technical capacity to assess and monitor forest resources, and to develop national forest management plans;
  • put in place effective regulatory and law enforcement arrangements to protect forests, including through preventing illegal logging;
  • promote the sustainable use of forest resources and diversify the economic base of forest-dependent communities;
  • support practical research into the drivers of deforestation;
  • encourage reforestation of degraded forest areas;
  • develop and deploy the technology and systems needed to help developing countries monitor and produce robust assessments of their forest resources; and
  • pilot approaches to providing real financial incentives to countries and communities to encourage sustainable use of forests and reduce destruction of forests.[5]

The success of this programme will depend ultimately upon the cooperation of governments such as those of Indonesia and Papua New Guinea to ensure that programmes and policies are implemented so that the existing tropical forests are protected and sustainably managed. In the past corruption and mismanagement has contributed to substantial illegal logging in these countries and this needs to be dramatically curtailed or the programme’s mechanisms , stated to be one of the best ways to reduce global emissions, will not succeed

The biofuels programmes of developed countries such as those in the European Union have the potential to drive the further clearing of tropical forests to establish palm oil plantations as a feedstock for the production of biodiesel.[6] It would be a major calamity if these programmes, established to protect the environment, were to produce significant unintended adverse consequences by continuing the destruction of rainforests and the release of massive quantities of greenhouse gases.

Carbon Sink Forests

To qualify as a carbon sink forest under the horticultural plant provisions new forests planted over the five years after 1 July 2007 will have their establishment costs immediately deductible. From 1 July 2013 the establishment costs may be depreciated over 14 years. This initiative will cost $23.6 million over the first four years.[7] The 14 year depreciation provision, which commences in 2012-13, will be on-going but no indication of the ongoing cost to the budget appears to be given in the Budget papers.

These carbon sink forests will need to be established under the Government’s Greenhouse Challenge Plus programme. It must also be demonstrated that these plantation forests comply with environmental and natural resource management guidelines applicable for their geographic location to ensure the carbon sink forests will have no adverse impacts on flora and fauna or on water resources. Deductions for carbon sink forest establishment under Managed Investment Schemes do not qualify for the provisions of this budget measure.

For forests to be effective as carbon sinks they need to remain established for a significant period of time. Under the NSW Greenhouse Gas Abatement Scheme, eligible forests must be established on cleared land and the carbon sequestered for 100 years.[8] There is no information in the Budget papers as to the length of time that carbon sink forests have to remain in the ground to qualify for this tax deduction. It is essential that they are allowed to keep growing for a similar length of time.

Climate Change Adaptation Centre

The April 2007 COAG meeting endorsed a National Adaptation Framework as the basis for jurisdictional actions on adaptation over the next five to seven years, with possible actions to assist the most vulnerable sectors and regions to adapt to the impacts of climate change. The Commonwealth announced that it would commit up to $26 million to establish and manage the Australian Centre for Climate Change Adaptation and $100 million programme funding for the Centre over five years. The Commonwealth also announced a new CSIRO Adaptation Flagship with funding of $44 million to provide more accurate information on localised climate changes.

Table 2 Funding for the Australian Centre for Climate Change Adaptation







Amount ($m)






Source: Budget Paper No.2 Budget Measures 2007-08[9]

The Commonwealth will manage the centre but will work closely with the states to ensure a coordinated national approach to the issue.[10] Examples of the types of activities that could be funded by the Centre include those involving:

  • identifying how to protect coastal infrastructure from likely changes in storm surge using sea walls and flood barriers;
  • the design of a heat wave warning system and ways to modify facilities to cater for those most at risk (eg the elderly);
  • helping to plan for expanding the use of feedlots by farmers to reduce the exposure of their valuable stock to variation in pasture availability and heat stress; and
  • identifying areas in national parks that will provide the best areas for recolonisation of plants and animals that have been displaced by climatic changes from their natural locations. [11]

The Climate Change Adaptation Centre and the CSIRO Climate Adaptation Flagship are essential initiatives for Australia in coping with the many and varied changes that will become evident over the next century. The recently released Infrastructure and Climate Change Risk Assessment for Victoria [12] said that a climate adaptation framework should aim to reduce the significant risks that climate change poses to the cost, service and life of significant Victorian assets. The Centre and the Flagship will be major resources used to assist with this aim.

Expansion of the Photovoltaic Rebate Programme

$150 million will be provided over 5 years to accelerate the installation of solar panels on homes and schools. $26 million will be spent in 2007-08 and $30 million per annum from 2008-09 to 2011-12.

Funding of around $20 million per annum from 2007-08 to 2011-12 for the photovoltaic (pv) rebate programme has already been included in the forward estimates, hence the additional funds committed in this Budget amount to $6 million (2007-08) and $11 million per annum to 2011-12.

Households will be rebated up to $8000 for installing an (eligible) average system retailing at about $14 000. Grants of $12 000 will be available for schools and public buildings to install solar panels. This approach aims to alleviate the higher overall cost of producing electricity by pv cells, estimated to be double the retail price paid by most households for grid supply.

This programme rejuvenates a smaller scale Government initiative which was originally put in place in 2000, extended twice and which was to finish in 2007. The take up to date of solar panels by households has been lethargic principally because of the long period (15 years) it takes to recoup, in power cost savings, the original capital investment. This programme, although possibly attractive in economic terms to individual householders because the rebate will pay for more that 50% of the capital cost, is expected to result in only about 20 000 households - or one in 500 - acquiring panels[13].

As well as contributing to greenhouse gas emission reduction in a visually non-intrusive way, an additional benefit from the programme will be through the encouragement of greater community acceptance of the technology.

A solar energy authority (ANU’s Professor Andrew Blakers) has expressed the view that the market support initiatives alone, like the rebate programme, need to be augmented by government strategies to foster technology development aimed at retaining and capitalising on the technical lead that Australia’s solar energy industry possesses.[14]

Methane drainage

The Australian Government will invest $18.5 million over five years, partly funded from the existing Greenhouse Gas Abatement programme, to reduce greenhouse gas emissions from underground coal mining activities. The funding ($5.9 million in 2007-08, $5.5 million in 2008-09, and around $2.3 million in each of the following three years) will be made available to reduce methane emissions from underground mines, found mainly in New South Wales and Queensland.

Underground black coal mines in Australia emit 12 million tonnes of greenhouse emissions each year. Much of that gas is of low concentration and cannot be captured and used. However where there are particularly high concentrations, cost-effective capture of methane may reduce greenhouse gas emissions by up to 900,000 tonnes of carbon dioxide equivalent, annually.

Methane is a highly flammable and potent greenhouse gas, about 22 times as potent as carbon dioxide. Generally speaking, capturing methane from coal seams and then using it to generate electricity is a relatively small scale, localised operation in terms of the power generated. However, the principal benefits are threefold – the methane issue has to be dealt with, hence effective capture enhances coal mining safety, power is generated and there is a net reduction in greenhouse gas emission intensity. Once captured, the otherwise waste methane gas formerly vented to the atmosphere can be used to generate electricity quite efficiently through small gas turbines for local industrial and domestic use, with any excess fed into the grid, or be converted to less harmful gases. The benefits of this technology are realised by having many small strategically sited methane capture/power generation installations which can collectively make a substantial contribution to emissions reduction. Hence the funding provides the incentive for more plants to be built.

Carbon capture and storage

Carbon capture and storage regulation will be established to enhance the management of the technology of geosequestration. $18.5 million will be spent over 4 years by the Department of Industry, Tourism and Resources for legislation development and Geoscience Australia for technical advice.

One hundred potential geological storage sites across Australia have been identified and are being examined for their viability to store CO2 safely and permanently. Substantial private sector investment is now flowing into research of the technologies. This present Budget initiative is aimed at tidying up the Commonwealth, state and territory governments’ regulatory regimes in order to present a consistent set of principles to govern any geosequestration (geological storage) proposals that private sector operators may bring forward in the future. There is no geosequestration of carbon dioxide in Australia at present but feasibility studies are in progress at two sites, hence the Government’s initiative is timely.


[1].     http://www.environment.gov.au/minister/env/2007/pubs/mr29mar07.pdf

[2].     Mitchell, S and Roberts, G 2007 Axe taken to forest initiatives Australian 30 March 2007

[3].     Beeby, R 2007 Forest Plan Hypocritical: Greens Canberra Times 30 March 2007

[4].     http://www.budget.gov.au/2007-08/bp2/download/bp2.pdf

[5].     http://www.environment.gov.au/minister/env/2007/pubs/mr29mar07.pdf

[6].     http://news.bbc.co.uk/2/hi/uk_news/6516893.stm

[7].     http://www.environment.gov.au/minister/env/2007/pubs/mr08may1807.pdf

[8].     http://www.fwprdc.org.au/content/pdfs/new%20pdfs/Forests,Wood&CarbonBalance.pdf

[9].     http://www.budget.gov.au/2007-08/bp2/download/bp2.pdf

[10].    http://www.coag.gov.au/meetings/130407/index.htm - climate

[11].    http://www.coag.gov.au/meetings/130407/index.htm - climate

[12].     http://www.greenhouse.vic.gov.au/CA256F310024B628/0/2021C307264A6473CA2572DD00055CBB

[13].   Warren, M A cold shoulder to global warming The Australian 9 May 2007 p. 8.

[14].    Warren, M Incentives risk driving solar-cell costs through the roof The Australian 16 May 2007 p8.