Pic: Emma Capp
The native forest and forest product industries contribute a miniscule amount to the Australian economy (in the order of 0.15% to 0.20% of GDP). Despite this, it has dominated the minds and energies of many politicians and environmental policy makers for decades.
Among other things, it helped spark the emergence of the environmental movement in the 1960s and ‘70s, defined a large part of the Hawke-Keating government’s environment agenda in the 1980s and 1990s, was central to the environmental achievements of the Carr, Beattie and Gallop state Labor governments in the late 1990s and early 2000s, and helped determine the outcome of the 2004 federal election.
In recent times, it has stolen much of the limelight in Tasmania as the Gillard and Giddings governments have tried—in collaboration with industry and green group representatives—to nut out a deal to refloat the industry. Much of the public debate around these negotiations has centred on the 500,000 hectares of proposed new reserves that are being offered in exchange for additional federal government funds. While important, of potential greater long-term significance are the policy concessions the industry is quietly seeking from government behind closed doors. What happens in these discussions will shape the forestry debate, and the native forest industry, for at least the next decade.
The native forest industry typically describes its operations as being “sawlog driven”. By this, it means that its primary target when harvesting is sawlogs. Pulplogs (i.e. those used to make wood chips and eventually paper products) are supposed to be merely an unavoidable by-product and, reflecting this, are often called “arisings”.
The reality is that the industry is dependent on pulplogs and woodchip exports. Since the late 1990s and early 2000s, native sawnwood producers have been muscled out of domestic markets by plantation softwoods and imported engineered wood products. This, along with supply shortages in certain areas, has resulted in a steady decline in sawlog production from native forests ( Figure 1 on on Crikey here ).
Despite this fall in sawlog and sawnwood production, for most of the 2000s, the industry was able to sustain itself on pulplogs and woodchips. The hammer blow came in 2008-2009, when a confluence of events—the global economic downturn, a shift in market preferences away from native forest products, increasing competition in woodchip export markets from South East Asian producers (particularly Vietnam and Thailand), and the appreciation of the Australian dollar—saw the demand for woodchip exports plummet and chip prices drop or stagnate.
The impact was immediate and the industry went into turmoil. Without the revenue from pulplogs and woodchips, mills closed, employment dropped and state forest agencies clocked up large losses, none more so than in Tasmania. Figure 2 ( on on Crikey here ) shows the value of native forest log production (by log type) from Tasmania’s public native forests, which are managed by Forestry Tasmania, for the period 2008-2012. Figure 3 ( on on Crikey here ) shows Forestry Tasmania’s net profit before tax and other items for the same period. These trends have been replicated around the country, although Tasmania has been the worst affected.
To arrest the decline, and stop it going the way of the whaling industry, the industry knows it needs something to fill the hole left by the shrunken woodchip export market. In the short term, the answer is direct government subsidies—bailouts to get it through the immediate crisis.
Beyond that, the industry is looking to two main policy levers to keep the undertakers away. The first is the Renewable Energy Target (RET). Rather than exporting native woodchips, the plan is to feed them into biomass burners to generate electricity. Without government help, this is not economically viable, at least not on a large-scale. To get around this, the industry is seeking handouts to fund the construction of new biomass burners and changes to the RET to ensure they are eligible to receive renewable energy certificates.
This is why the Federal Environment Minister, Tony Burke, recently announced an additional $25 million for “sustainable residue solutions” under the Tasmanian Forest Agreement; what he meant to say was a subsidy to help fund a new native forest biomass burner. We have previously written about the flaws in the plan to make native forest waste eligible under the RET.
The industry’s second saviour is the Carbon Farming Initiative (CFI). The CFI is an offset scheme that allows forest owners and others to generate offset credits—called Australian Carbon Credit Units (ACCUs)—for avoiding emissions or increasing the sequestration of carbon in sinks. These credits can be sold to polluters, who can use them to meet their liabilities under the carbon pricing scheme.
The plan being mooted within state forest agencies is to generate ACCUs by delaying the logging of native forests and using the revenues from the sale of the credits to sustain their operations (i.e. rather than harvesting a forest plot in year 1, it is harvested in year 5, which lowers net emissions over years 1-4). To make this happen, the industry needs the federal government to do two things:
• Amend the CFI Act to ensure these projects are eligible to receive ACCUs
• Approve a suitable CFI methodology (i.e. a method to calculate how many ACCUs a project receives).
The Australian government is currently working on both of these and details are expected to be released to the public within a few months.
These two policy mechanisms—the RET and CFI—are where the industry is devoting much of its current energy. Their lobbying success will determine what happens to Australia’s native forests and the native forest debate for years to come.
*Andrew Macintosh is an associate professor at the ANU Centre for Climate Law & policy and Richard Denniss is the executive director of the Australia Institute.
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Comments (10)
The article seems to make it pretty clear that the environmental organisations have been used or are being used to save the woodchip industry. If the RET proposal gets the go-ahead they (ENGOs) are going to cop a big backlash.
What is with this penchant for burning forest waste? Why are we not looking at Anaerobic Digesters or Bioethanol reactors based on woodwaste and greenwaste. Fuel can be created for vehicles or burning in gas generators, then the digestate or wood pulp can be used as fertiliser or mulch/compost or then dried and pelletised for burning.
Or how about using it to make fiber and chip boards?
This is what value adding is all about. Squeezing every last production capacity out of a resource.
By all means, use timber, its a great resource, but for heavens sake get as much out of the material as you can to justify the long growth periods.
But noooo, we just want to burn it.
Honestly the continuing short term, miopic thinking just beggars belief.
We need to stop thinking industries can be entrenched and static just to cater to peoples warped need for stability (a figment of our imagination), routine and tradition.
This is the age of information which is ever increasing in speed of access and volume, and innovation.
The choice is now. Set ourselves up to expect and react to change, or get left behind.
Due to past over cutting of native forests and reduced annual cuts to remaining sawmillers including the Specialty Timber sector the Ta Ann factor with cutting through stands of regrowth as well as the doubt surrounding the ability of eucalypt plantations to begin supplying sawlog material as of 2020, there is no scope whatsoever of handing over up to 500,000 for permanent reservation.
Woodchipping in Tasmani’s native forests is an insignificant issue, as two small operators remain in the north of the state who may eventually solve a part of the eucalypt plantation marketing crisis to at least help private growers with some return on their investment.
The State Government has sacrificed itself for failing to represent the majority of Tasmanian’s views by supporting the exclusive views its two Greens in government.
If the Federal Government /Minister Tony Burke keeps pushing us around with deals and time limits, hints of bribes and the like this could leave the Gillard government stranded as Tasmanian voters are increasingly becoming sickened by this mess now at the hands of our State MLC Select Committee to bring back some common into the woeful governance by our Lower House.
An RET in the Tasmanian context would be nothing less than grand larceny.
At the height of its woodchip frenzy, Tas was logging about six times as much proportionally as Victoria and chipping around 94% of it.
The same quality of people are still running both the industry and the government.
Given the extreme degradation of our human resources in the logging and governance areas, we are probably better off with non-extractive forms of theft and begging.
John Hayward
The fate of the Gillard Government could be in the hands of the Tasmanian voters who neither like the Super trawler hanging around in Ausralian waters nor do they like Tony Burke poking deals at us over the myobic Tas Forest Agreement.
Robin,
are you unable to see the total inconsistency in your two paragraphs above???
The only consistency is that FT, supported by the syncophantic CFPO, and successive Ministers of all persuasions, has totally destroyed what once was a sustainable industry.
Jurassics all of them and Harriss, Hall, Wilkinson et al are following the same path.
The Tasmanian native forest industry must stand on its own feet without any more handouts, concessions, priveleges or any other help. Any company or organisation which cannot make a profit otherwise should be left to its commercial fate.
Until then organisations like Forestry Tasmania are to be honestly viewed as a total waste of money and resources for the sake of a handful of lazy spiteful freeloaders and should be dissolved.
#7 John, I think that i have explained it pretty well my #3,#4 #7. I’ve done my bit and sent in my TFA Individual Submission and now its up to the MLC select Committee to make a judgement. Its a tough one and I definitely dont expect a result that will suit everybody. I suspect it will drag on as the ENGO’s wheel an deal on and on.
#8 Russell, then who would take over commercial forest mangement, Chinese or a Korean Coy, as they are infiltrating Australian timber interests on the mainland.
No mention from you of FT’s role in the recent bush fires, eh Russell!
Re #9
What “commercial” forest management? What would you call Malaysia’s infiltration via the free-loading native forest resource depleting Ta Ann (and fully supported by FT and the Tasmanian Government), Robin?
All we’ve witnessed for decades is loss-making resource depleting forest MIS-management. You change your tune about FT’s incompetent Management pretty quick Robin!
Regarding “no mention from (me)” in FT’s very minor and belated role in the recent bush-fires, see my posts in http://tasmaniantimes.com/index.php?/weblog/article/green-arrogance-burns-fiercely/ , eh Robin!
Maybe you will answer the questions posed in my comments #12 and #64 which Dave F couldn’t or wouldn’t? After all it was you who resorted to the FT fire-fighter argument when nothing else was left to support FT’s existence. It seems that argument has also evidently come to a paltry end.