Koala National Park reveals carbon credit and offsets shortcomings
By Patrick Francis 10 August 2026
A new Clean Energy Regulator carbon credit methodology available to state governments who ban logging in state forests has been the catalysts for a wave of criticism around using Australian Carbon Credit Units (ACCUs) as offset for entities which continue to emit CO2 into the atmosphere. The Improved Native Forest Management Method (INFM Method) allows state governments to generate ACCU’s based on not harvesting trees.
According to Forestry Australia experts the INFM method could potentially over credit projects by 40 to 100% meaning the method might be making no inroads in removing CO2 from the atmosphere, yet taxpayers are forking out millions of dollars in carbon credits.
In New South Wales the government is basing paying for its newly declared Great Koala National Park with INFM method credits generated by banning native forest logging. Forestry Australia President Dr Michelle Freeman said the findings raise serious concerns about whether credits issued under the INFM Method would represent genuine climate benefit. “There are fundamental problems with this Method. Its prescribed accounting and modelling framework is structurally biased towards issuing more carbon credits than the genuine climate benefit achieved,” Dr Freeman said
What’s worse state governments can sell millions of ACCU’S generated by the methodology to businesses who need to offset their CO2 emissions to meet government’s Safeguard Mechanism greenhouse gas accounting requirements.
“If the Method overstates the carbon benefits achieved, emissions offset through the purchase of ACCUs will not be balanced by an equivalent climate benefit. That weakens confidence in the ACCU Scheme, makes it harder for Australia to genuinely meet its emissions-reduction targets and means the Safeguard Mechanism will not work as intended.”
According to Forestry Australia the NSW government has indicated it could generate approximately 22 million ACCUs over 15 years by ending timber harvesting in relevant public native forests, including the Great Koala National Park. If the Method overstates abatement by around half, approximately 11 million ACCUs could be issued beyond the genuine CO2 abatement benefit achieved.
“A method with the potential to materially affect Australia’s carbon market should be transparent, reproducible and scientifically defensible. This is what is expected of a high integrity ACCU Scheme method, yet the INFM Method has not met this bar,” Dr Freeman said.
Freeman is supported on the lack of ACCU integrity associated with the INFM method by the co-CEO of the Australia Institute Richard Denniss an organisation long opposed to native forest logging. Denniss used a June podcast to not only criticise the way the NSW government will use INFM credits to fund the Great Koala National Park but also the way carbon credits can be used as carbon offsets by greenhouse gas polluters. He called the strategy “one of the bigger environmental frauds in Australian history”.
According to Denniss the NSW government has been promising to establish the Great Koala National Park since 2015 but has sat on its promise until the INFM methodology was approved.
“But then in the last year or so, the New South Wales government started to say, ‘Ah, what I meant to say was I might set up a national park but only if I get some sweet, juicy carbon credit cash from the federal government’.”
Denniss said it is important to understand that there are important differences between carbon offsets and carbon credits.
Carbon credits are generated when a person or organization is paid to store CO2 from the atmosphere as carbon in vegetation and or soils. An ACCU is one tonne of stored CO2 equivalent. “that’s a good thing you did, have some money (for storing it)”. There can be problems with credits for example if trees burn down or die. “When we pay people to save carbon maybe some of it’s wasted but we’re not doing much harm”.
Examples of how land based carbon credits are too imprecise or slippery to be defined as removing 1 tonne of CO2e from the atmosphere are found regularly in soil science research. For instance, an August 2026 Journal of Advanced Research paper by Xiyuan Xu et al states: “Soils store more organic carbon than the atmosphere and terrestrial vegetation, making them a critical component of the global carbon cycle. The stability of this soil organic carbon (SOC) reservoir plays a pivotal role in climate regulation: microbial decomposition can release carbon as carbon dioxide (CO2), contributing to global warming, while stable SOC pools promote long-term carbon sequestration. Microorganisms are central to these processes. Recent studies highlight that microbial diversity, physiology, and life-history strategies strongly affect SOC turnover and persistence. Understanding how environmental factors shape microbial traits and carbon processing is therefore essential for predicting soil-atmosphere carbon feedbacks and guiding sustainable land management under global change”.
In J.L. Barsotti et al. / Soil & Tillage Research 134 (2013) 133–141 the USA Great Plains research found sheep grazing during fallow periods can be used to increase soil C and N storage, obtain farm Carbon credits, and sustain crop yields compared to herbicide application for weed control, provided enough crop residue is left in the ground to increase C and N cycling and reduce soil erosion. The variables impacting the conclusion highlight how imprecise such management is for generation soil carbon credits.
In Glob Chang Biol 2026 Aug;32(8) the authors state “Warming and elevated CO2 (eCO2) are two potentially opposing climate-carbon (C) feedback mechanisms that modulate the magnitude of the land C sink, with warming decreasing and eCO2 increasing C sequestration. However, their net effect on soil organic C (SOC)-the largest terrestrial C stock-remains uncertain”.
Assumptions around how microorganisms are behaving to impact soil organic matter and humus (persistent soil carbon) level is highly speculative given a teaspoon of soil contains upwards of a billion organisms yet carbon project auditors make precise statements about how many tonnes of carbon are increasing in a soil due to land management.
Table: Carbon trading is based on certainty associated with an ACCU abating or delivering 1 tonne CO2e but land based credits are impacted by complex biological interactions within the soil food web as demonstrated by numbers of microorganisms per teaspoon of soil. Source: USDA Soil Biology Primer 1999.
Carbon offsets are different because an organisation can buy them to offset the greenhouse gas emissions it is generating into the atmosphere. “A carbon credit is the government paying you to do a good thing and offset is a polluter paying you to do a good thing so that the polluter can do a bad thing. The climate science tells us what we need to do to have any chance of a safe climate is to burn less fossil fuels to put less carbon dioxide into the atmosphere and store as much carbon as we can in trees and soil. There’s no science that says it’s a good way to tackle climate change to let the polluters increase their pollution because someone planted a tree”.
Denniss says carbon credits are a problem as a tool to reduce CO2 in the atmosphere when organisations are paid to adopt a strategy that sequesters CO2 but they were going to adopt the strategy anyway without the payment. That’s why the Great Koala National Park INFM method credits are dodgy, “no one’s planting a tree”. There is nothing additional happening as far as CO2 removal from the atmosphere. At the same time the state government can sell the credits to large polluters who now are legally required to offset their own above-baseline emissions under the Safeguard Mechanism.
Fergus Green and Francis Medlock published a review for the Australia Institute about “how carbon offsetting undermines the Safeguard Mechanism” in June 2026. The Safeguard Mechanism is the Australian government’s major climate change strategy tool because it legally requires the nation’s largest greenhouse gas emitters (more than 100,000 tonnes CO2e per year) to account for their emission and lower them at an annual decline rate of 4.98% below their annual emissions baseline. This is meant to incentivize major emitters to change practices to ones which lower annual greenhouse gas emissions”.
According to the reviewers major emitters have an escape mechanism via trading carbon offsets.
“A facility is allowed to emit more than its baseline, so long as its operator acquires and surrenders eligible carbon offsets to reduce the facility’s ‘net’ emissions to within the baseline”. That’s the link to the dodgy Great Koala National Park INFM method for generating carbon credits as well as to all other ACCUs which can be purchased by companies and used to offset their emissions while continuing to put CO2 into the atmosphere.
The illusion behind the Safeguard Mechanism for addressing CO2 emissions is that in any one year if a company emits less tonnes of CO2e than its baseline it generates Safeguard Mechanism Credits (SMCs) each of which has a nominal value of 1 tonne CO2e just the same as an ACCU. The company can then sell it SMCs to other companies that are in excess of their annual baseline.
Green and Medlock contend that “because of problems with the way baselines are calculated, many facilities have ended up with emissions below their baselines without having to make any additional effort to cut their emissions, meaning they are able to generate valuable SMCs for nothing. This is one reason why an SMC does not necessarily represent abatement equivalent to a tonne of CO2e that is actually emitted into the atmosphere.”
The other strategy that companies can use to meet their Safeguard Mechanism obligations is to purchase ACCUs with the greatest number of these generated on agricultural land by a range of approved methodologies such as reafforestation and soil carbon enhancement.
“Project-based carbon credits suffer from deep and inherent flaws, meaning many do not represent additional abatement at all, few represent the abatement that they are claimed to represent, and—in the case of land-sector projects, which account for the highest proportion of ACCUs—no project can store carbon in trees and soils for long enough to offset the carbon dioxide released into the atmosphere from burning fossil fuels, so such projects are inherently non-equivalent to fossil fuel emissions”.
Figure: Carbon credits using land based soil and vegetation methodologies have short CO2 return cycles but these are impacted by so many variables that their 1tonne of CO2 equivalence to fossil fuel emissions makes trading one for the other imprecise and provides an opportunity for Safeguard Mechanism businesses to greenwash climate accountability claims.
Table: Emissions from burning fossil fuels are known and precise and there is no return pathway from the atmosphere for thousands of years.
This statement is alluding to the difference between CO2 as a stock gas and CO2 as a flow gas. Fossil fuel burning adds to CO2 stock in the atmosphere and remains there for thousands of years. On the other hand some greenhouse gases such as methane while having a higher Global Warming Potential than CO2, breaks down in the atmosphere in approximately 12 years and the CO2 generated is removed from the atmosphere by plant photosynthesis (growing trees, shrubs, grasslands) and liquid carbon pathways in the soil. Livestock will eat or be fed the plant material and methane is produced but the cycle means CO2 flows between air plants and soil without being additional to the CO2 stock in the atmosphere.
Green and Medlock contend that because Australia’s largest greenhouse gas emitting businesses can under the Safeguard Mechanism lawfully use carbon credits of dubious integrity to purportedly “offset” their excess emissions under Australia’s flagship climate policy illustrates that the scheme is not fit for purpose and cannot be relied upon for achieving its legally-enshrined climate goals.
“In reality, the consequences of carbon offsetting are much more dire: not only is the incentive to decarbonise drastically reduced, but the endemically poor integrity of carbon offsets means that more emissions will enter the atmosphere than otherwise would have. It is this more dire reality in which Australia is currently stuck: carbon offsetting doesn’t work in practice in the way assumed in the design of the Safeguard Mechanism, and reliance on it has inevitably resulted in substantially more GHGs entering the atmosphere than are reflected in the official accounting of the scheme’s ‘net emission’ outcomes,” Green and Medlock conclude.
Another unexpected critic of carbon offsets as a government greenhouse gas reduction policy tool is Peter Donovan from the USA Soil Carbon Coalition. He views climate change in terms of water cyling and carbon cycling where the latter has been simplified around carbon pollution and carbon footprint as a kind of balance “where emitting CO2 into the atmosphere might be balanced or offset by carbon sequestration or drawdown in trees, soils or rocks. Instead of the circle of life (on earth), carbon can become a commodity”.
“This balance amputates the enormous complexity of carbon cycling to fit into our habits of narrow problem-solving, to fit into our legal, economic, political, and social architecture. In today’s world of rampant commodification, financialization, and enclosure of ecosystem “services” by big money and big environmental organizations, carbon “sequestration” has become a climate policy. Because fossil fuels are intrinsic to our economies and ways of life, most governments can’t restrain emissions, so they are supporting markets for carbon “offsets” that seek to reconcile competing claims:
1) the claims of carbon “sequestration” on land parcels, in trees or soil—the supply—with
2) the demand, which is the needs of individuals, businesses, and governments to claim they are reducing their carbon footprint or acting against climate change.
Neither claim is solid” he contends.
Donovan contends the movement of carbon through plants, soils and atmosphere is turbulent, often obscure and not easily measured as it responds to a myriad of complex natural influences.
“Even well-intentioned claims of sequestration or offsets rest on a rickety ladder of assumptions, ripe for profiteering, power grabs, and fraud. At either local or global scales, there is no way to tell if carbon sequestration is working to slow climate change. Meanwhile fossil fuel emissions—one of the most easily tracked movements of carbon—continue to rise. We know it’s wrong but we may not know what else to do. …. Reliance on offsetting carbon emissions becomes a convenient substitute for reducing fossil fuel use“.
Figure: Peter Donovan contends that carbon offset trading is a carbon balance fantasy developed by governments as a substitute for elector unpalatable fossil fuel emissions reductions and initiatives to bolster water and carbon cycles across the land sector.
Figure: The Australian government has schemes to accommodate more than half of the national annual emissions but no data about equivalence between fossil fuel emissions and land based abatement.
