Forest Products Industry

Just over two years after its launch, Australian Forest and Wood Innovations (AFWI) has backed 39 research and innovation projects worth more than $67 million across Australia’s forest and wood products sector. Source: Timberbiz The national institute, supported by a $100 million Australian Government investment, has brought together more than 100 industry and research partners and over 300 people across Australia, including growers, processors, manufacturers, Indigenous enterprises, government agencies and researchers. Its progress is detailed in the AFWI Highlights Report 2024–2026, launched by the Minister for Agriculture, Fisheries and Forestry, Julie Collins, at the Australian Forest Products Association’s National Forestry Day event at Parliament House. Since its official launch in March 2024, AFWI has invested about $29 million in research and innovation projects, supported by a further $38 million in partner contributions. Ms Collins said AFWI had made strong progress in its first two years. “AFWI has made strong progress in just over two years, with its investments already translating into practical outcomes across Australia’s forest and wood products sector,” Minister Collins said. “I congratulate everyone involved and look forward to hearing more about the impacts being delivered and the further opportunities this national capability can unlock for industry, regions and communities.” AFWI CEO and Executive Director Dr Joseph Lawrence said the report showed how quickly AFWI had grown from a new initiative into a national research and innovation network. “In just over two years, AFWI has grown from a new national initiative into a substantial industry-led innovation network operating across Australia,” Dr Lawrence said. “We are bringing together industry, research and government to tackle key challenges: healthier and more productive forests, getting more value from Australian fibre, developing new bioeconomy opportunities and helping unlock manufactured timber housing at scale.” AFWI’s work is structured around four pillars: Healthier Forests, Maximising Fibre, Climate Solutions and Housing Innovation. Projects span forest productivity and resilience, biosecurity and climate adaptation, low-carbon fuels and bioproducts, engineered timber products, advanced manufacturing and new approaches to timber construction. AFWI is also rebuilding Australia’s long-term forest and wood products research capability through three Research Centres, hosted by the University of Melbourne, the University of the Sunshine Coast and the University of Tasmania. Across the portfolio, more than 90 early-career researchers are developing expertise while working directly with industry on practical challenges and pathways to adoption. Moving research into industry A major focus for AFWI’s next phase will be helping research move into industry, including through advanced timber manufacturing, manufactured housing and new bioeconomy opportunities. AFWI’s The Precinct initiative, led by IndustryEdge, is bringing together industry, research and government partners to develop new engineered wood products, prefabricated dwellings and bio-based co-products at scale. The initiative is designed to grow domestic manufacturing capability, reduce exports of lower-value fibre and substitute imported engineered wood products with higher-value Australian-made products. AFWI also provided technical support to the John Curtin Research Centre’s report, Manufacturing Homes: A National Strategy for Solving Australia’s Housing Crisis, which sets out a national strategy for expanding modular and offsite construction capacity in Australia. The report calls for AFWI’s proposed National Demonstration of Australian Manufactured Timber Housing as an early proof point. The proposed $300 million-scale demonstration would involve 600 manufactured timber dwellings across six to ten sites, showing how Australian timber, advanced manufacturing and modern construction methods could contribute to housing delivery at scale. Dr Lawrence said these initiatives reflected the type of practical, large-scale work AFWI was established to support. “The next phase is about taking the capability and partnerships we have built and turning them into larger-scale outcomes, from healthier and more productive forests and new bioeconomy industries through to advanced timber manufacturing and manufactured housing,” Dr Lawrence said. “Australia has an opportunity to turn more of our renewable timber fibre into higher-value products here at home, strengthening regional economies and sovereign manufacturing capability while contributing practical solutions to Australia’s housing challenge.” AFWI’s focus will increasingly be on helping research move into commercial pathways, standards, investment opportunities, new technologies and practical industry adoption. “The foundations are now firmly in place. Our focus is on ensuring research moves into industry, investment and implementation, and delivers tangible benefits for Australian businesses, regional communities and the nation,” Dr Lawrence said. AFWI acknowledged the Australian Government and the Department of Agriculture, Fisheries and Forestry for their investment and support, the University of Tasmania as AFWI’s host institution, and the industry, research, government, Indigenous and regional partners contributing to its work. AFWI also acknowledged the Australian Forest Products Association for hosting the launch as part of National Forestry Day. The AFWI Highlights Report 2024–2026 is available at https://www.afwi.au/afwi-highlights-report-2024-2026/

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Recent commentary has highlighted just how easy it is for misconceptions about the Emissions Trading Scheme (ETS) to spread. In some cases, a lack of understanding can result in significant financial opportunities being missed. At the opposite end of the spectrum, forest owners who do not fully understand the long-term implications of registering their forest in the ETS can find themselves with legal obligations they neither expected nor budgeted for. While the ETS has been with us for nearly 18 years, it has undergone several significant updates. It is therefore understandable that many people struggle to keep up with these changes and the impact they have on forest owners across New Zealand. In particular, there seems to be some confusion around how carbon credits are claimed in the ETS and the long-term obligations that forest owners face as participants in the scheme. These obligations depend largely on which of the three ETS carbon accounting categories a forest is registered under: Stock Change, Averaging or Permanent Forest. Until the end of 2022, all ETS forests used Stock Change, or the “saw-tooth” model for carbon accounting. In 2023, two additional categories – Averaging and Permanent Forest –were introduced to better reflect the different objectives of rotational forests destined for harvest and continuous-cover permanent forests. For forests registered under the Stock Change category, carbon credits can be claimed annually but carbon losses due to harvesting must also be accounted for, which can result in a significant quantity of carbon credits needing to be surrendered back to the Crown. If the forests are not harvested, the forest owner will continue to accrue carbon credits across the lifespan of the forest. Averaging accounting is well suited to forest owners who are planting a forest with the intention of harvesting. Carbon credits are claimed until the long-term average age for the species, typically 16–26 years for exotic forests. Beyond this point no further carbon credits are claimed. For forests harvested after reaching their long-term average age, a full surrender of carbon credits is only required if the land is not replanted within four years or converted to a non-forestry land use. The Permanent Forest category is aptly named; forest owners entering their forests into this category should be prepared to keep the trees in the ground in perpetuity. The minimum sign-up period into this category is 50 years and during this time the forest owner is unable to voluntarily withdraw from the scheme or clear-fell their forest. Carbon credits continue to accrue across the lifespan of the forest. Selective tree harvesting can be undertaken, as long as 30% canopy cover is maintained across the entire forest area. Whilst the benefits and outcomes under Averaging Accounting are easily understood, the waters can be murkier for forests registered under Stock Change or the Permanent Forest category. This often leads to questions such as: My forest is registered under Stock Change, how many carbon credits can I sell liability-free, and still harvest my forest? The answer to this is that it very much depends; planting year, species, length of time registered in the ETS, harvest age, year of replant and replanted species are all inputs into this equation that can significantly impact the end result. This carbon accounting method is the most complex and advice from a forestry professional is highly recommended. My forest is registered in the Permanent Forest category, what will happen once the 50-year sign-up period is over? Some forest owners have entered this category thinking that they will claim carbon credits for 50 years, exit the ETS and harvest their forests. While exiting the scheme after 50 years is technically possible, doing so would generally require the surrender of a substantial quantity of carbon credits. Whether that is financially viable will depend largely on the carbon price at that time. The ETS is a complex beast, and it is essential to understand the weave of the specific forest characteristics, registration category, historic and future carbon credit claims and on-going compliance requirements. I cannot stress enough the importance of seeking professional advice before registering your forest in the ETS, purchasing a forest that has been registered in the ETS or selling carbon credits. Kirsten Stuart is the Company Forester & Consultant for Laurie Forestry  

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