How a controversial scheme will fund Australia's largest koala park

The New South Wales government's plans for the country's largest dedicated koala national park have passed a key hurdle, but the plan to fund it has sparked debate over who should pay for conservation.

The Great Koala National Park (GKNP) is planned to span 476,000 hectares running inland of Coffs Harbour, south to Kempsey and as far north as Grafton, and was a key promise from Labor during the 2023 state election.

The state government plans to help pay for its costs by selling carbon credits generated from ending logging, and earlier this month the Senate rejected a bid to block the scheme, keeping the park on track for delivery by the March 2027 election.

Supporters say the park may never have happened without the credits, but critics argue governments should not need a financial incentive to create national parks.

What is a carbon credit?

Carbon credits are generated by ending intensive farming practices, reforestation and other activities that take out more carbon dioxide from the atmosphere than they create.

Through the Australian Clean Energy Regulator, projects are certified and the resulting carbon credit units can be sold on the market like shares on the exchange.

Companies who either voluntarily want to lower their carbon footprint or are required to by law to do so have the opportunity to buy the credits.

The NSW government plans on generating carbon credits by ending logging in 176,000ha of state forests set to become part of the GKNP.

Professor at the Crawford School of Public Policy at the Australian National University Frank Jotzo said many conservationists take issue with carbon credits because they do not encourage polluters to change their practices.

"There's all manner of industrial companies as well as resource companies … who cover part of their emissions reduction obligation by paying for credits," he said.

"You could take the opposing view and say these industrial and resource companies should be reducing their own emissions; that's where the fault line lies in the debate."

Who's paying?

Last year the NSW government finalised the boundaries of the GKNP and issued a moratorium on native logging in the proposed area.

Instead of running the park at a cost to taxpayers, the upkeep would be covered by selling carbon credits, which would be prioritised to manufacturing industries and banned from fossil fuel companies.

The plans needed the support of the federal government who runs the Clean Energy Regulator and decides on which projects are eligible to earn carbon credits.

Conservationists who oppose carbon credits disapproved of the GKNP project, and three federal Greens senators crossed the floor to vote with the Coalition to unsuccessfully block it.

Should national parks pay for themselves?

While carbon credit schemes are not new, Professor Jotzo said Australia and China were both pioneering strategies to use them to encourage the preservation of forests.

"There is nothing that incentivises or compels state governments to create national parks; there is really no push factor in that regard," he said.

"I think there's probably a bona-fide argument here that, without the carbon credits, the park might not have gone ahead.

"From that point of view, going ahead with [the GKNP] is unambiguously a good thing because we will see substantial carbon benefits and biodiversity benefits that flow from this."

University of New South Wales senior lecturer in public sector management Megan Evans said having to cover the costs of creating a national park sets a dangerous precedent.

"I just find it extraordinary that we are having a discussion about how do we actually incentivise government [into] doing something that is actually their job," Dr Evans said.

"The idea that a state government is poor or unable to find the resources to create a national park is just an absolute lie.

"It's a lie that has been manufactured and socialised and normalised by these discussions around how do we make national parks pay for themselves."

Dr Evans said the plans still have unresolved problems which are core to the ongoing debate about the efficacy of carbon credits offsetting polluting industries.

"Offsets should only be a very last resort and they should be very expensive in order to incentivise that behaviour," she said.

"Spending tens or hundreds of millions of dollars on credits to ensure compliance is just spare change at the back of the couch [for many companies]. 

"We have a carbon credit regime that is in operation, but it's not actually facilitating the decarbonisation of Australia's economy."

For and against

Despite her disapproval of carbon credits, New South Wales Greens MP Sue Higginson said the scheme was the best way to set up the GKNP.

"This is the good method that actually sees the end of logging," she said.

"The next method, the industry method, is nearly ready [and] would have seen carbon credits generated and logging continued."

National Parks Association NSW Coffs Coast branch chair Grahame Douglas described carbon offsets as "very inappropriate" but argued the GKNP plans have integrity.

"It's not perfect, but it does provide a very real way forward for the management of these areas for conservation," Dr Douglas said.

Timber New South Wales president Andrew Hurford argued ending logging in the GKNP will have more harm on the environment than the predictions made by the carbon credits system.

"We know that when we don't produce timber here in Australia, we import it to make up the difference," he said.

"We replace things like timber power poles … with fibreglass produced with resins out of petrochemicals or steel produced out of coal and iron ore, much higher emissions than anything the timber industry would produce."

What's next?

NSW Environment Minister Penny Sharpe welcomed the approval by the Senate and said future parks, including the Great Southern Forest National Park currently being advocated for, were also on her radar.

"Methods like [this] would create a framework that could make it easier to create projects like this," she said.

The scheme still needs to be passed in the House of Representatives and approved by the Clean Energy Regulator before legislation for the GKNP will be introduced in the NSW Parliament.