Can Australian plantation forest carbon offset methods increase carbon storage and timber supply? A case study from the Green Triangle plantation forestry region in Australia

The plantation forestry estate in Australia has been in decline for a decade or more. Previous studies attribute observed investment inertia to factors including the long-term nature of forestry investments, high up front establishment cost and more recently water resource constraints. The introduction of plantation forestry methods as part of the Australian Carbon Credit Unit Scheme in 2017 has generated renewed interest in plantation forestry as a carbon abatement option. To assess this opportunity, we performed high spatial resolution bioeconomic modelling of southeastern Australia's Green Triangle forestry region to understand the joint influence of site productivity, species selection and spatially variable costs including agricultural land prices and transport distances on land use change and additional future timber flows. We found that additional plantations may be economically viable at a carbon price of AU$39/t CO₂e. New softwood (P. radiata) plantations provide the lowest cost option across the region when compared to hardwood (E. globulus). However, at carbon prices below AU$50/t CO₂e comparatively little technically feasible abatement is possible for both plantation species with only 632,000 t CO₂e from hardwood and 12.9 Mt CO₂e, from softwood under economically optimised conditions which equates to 0.13 and 2.5 percent of Australia's 2023 emissions respectively. We found however that this may translate to significant additional timber flows for the region's processing industry even at lower carbon prices. We estimated an additional 62,600 green metric tonnes of hardwood (1 percent of annual Australian plantation hardwood harvest) and 6.6 million m³ of cumulative softwood (44 percent supply of annual Australian plantation softwood harvest) over a 50-year period at AU$40/t CO₂e. However, the results were found to be sensitive to discount rate assumptions. The discussion focuses on the economic and policy factors that may enable/limit the use of carbon markets to expand the Australian plantation forestry estate.