Jet fuel from "forest waste" is the woodchip industry's second act, not a climate solution

Reading Catherine King’s press release announcing $32 million for HAMR Energy’s forest-to-jet-fuel project, I found myself doing a familiar bit of translation. Where the government says, ‘forest waste,’ read ‘woodchips.’ Where it says ‘residues,’ read ‘the bulk of what comes out of a logging coupe.’ This is not a new idea dressed up as innovation. It is the export woodchip industry finding a new customer, right as its old one disappears. 

The mechanics are straightforward enough. ARENA is backing HAMR to build facilities in Victoria and South Australia that gather up to 600,000 tonnes a year of what the government calls forestry residues, sawdust, bark, woodchips and thinnings, and convert it into renewable methanol, which can then be turned into sustainable aviation fuel. As reporting on the announcement has pointed out, the government’s own preferred term, ‘forest waste,’ is a stretch. This is forestry waste, the leftover fraction of a logging operation, and for decades that exact material has had one main market: the export woodchip trade. 

That trade is in structural decline. Global demand for woodchip pulp has been falling for years, squeezed by digital media, competing pulp sources and mounting scrutiny of where the fibre comes from. An industry that was, by volume, overwhelmingly a woodchip business dressed up in sawlog language now needs somewhere else to send its residues. Sustainable aviation fuel, backed by a federal subsidy and a “hard to abate sector” narrative, is that somewhere else. This is less a rescue plan for the climate than a rescue plan for an industry watching its biggest market dry up. 

It matters what happens to that carbon. As a recent briefing from the Environmental Paper Network lays out clearly, methanol made from wood still releases carbon the moment it is burned, exactly like fossil fuel does. The brief is clear about the flawed assumptions underneath the whole model: that carbon emissions from trees is neutral, that regrowth cancels out emissions, and that residues are impact free. None of that holds up. Residues and waste routinely make up the majority of what is logged, not a marginal leftover, and any regrowth that might reabsorb the carbon takes decades we don’t have. When the fuel made from forest products is burned in a jet engine, that carbon goes straight back into the atmosphere. It is combustion, not decarbonisation, however it’s rebranded. 

There’s also a volume problem the government hasn’t acknowledged publicly. A facility that needs hundreds of thousands of tonnes of wood a year, every year, must draw that supply from within an economically viable trucking radius, typically no more than 100 to 150 kilometres. That is a large and permanent footprint of plantation land locked into supplying a single fuel plant. And once a processing facility is built and operating, it drives demand for whatever feedstock it can secure. HAMR’s current target supply is plantation residue from Green Triangle growers, which are materially different and lower impact than native forest logging. But the pattern across bioenergy globally is that facilities built on an initial plantation “waste” supply expand their sourcing once they need to keep running at scale. That’s exactly the scope creep this sector needs independent scrutiny of, not public subsidies and media releases 

The Australia Institute’s previous analysis on the pitfalls of native forest logging that is driven by high volume low value woodchip markets is worth remembering here. When a native forest is logged, less than one per cent of the biomass removed ends up as sawn timber. The rest, the great majority, becomes exactly the kind of “residue” now being marketed as a clean fuel feedstock. 

Greenwashing forest waste biofuel into an offset.

Here is where this scheme risks compounding one deception with another. Australia already has a live case study in what happens when forest-derived carbon accounting meets a carbon trading scheme, and it is not reassuring.  

The Australia Institute’s report Safeguarding the Fossil Fuel Industry?, by Fergus Green and Frances Medlock, found that the Safeguard Mechanism, Australia’s flagship policy for cutting emissions from its biggest industrial polluters, is failing because it lets those polluters meet their obligations with effectively unlimited offsets rather than actually reducing what comes out of their own stacks. As Richard Denniss put it when the report was released, the mechanism intended to make our biggest polluters pollute less is instead safeguarding their expansion plans. 

The same design flaw sits ready to swallow forest-based aviation fuel whole. Once a wood-derived SAF industry exists, it becomes a natural candidate for the Australian Carbon Credit Unit (ACCU) method that can be used as an offset for a Safeguard-covered facility such as a gas processing plant, an LNG terminal, or a coal fire power station can buy instead of cutting their emissions.  

That is precisely the loophole the Australia Institute’s report warns against: an ACCU is only meaningful if it represents genuine, additional abatement, and the report found the current scheme routinely fails that test even for established methods. Layering a new forest-biomass fuel credit on top adds a second layer of unreality. First, you must accept the shaky premise that burning wood-derived methanol is climate neutral because a tree might regrow in thirty years before it is logged for turning into jet fuel. Then you must accept that a paper credit generated from that premise can be sold to a fossil fuel company as a substitute for reducing its own emissions. 

That is the mechanism by which a subsidy for regional jobs and fuel security becomes a new instrument for extending the life of the industries the Safeguard Mechanism was designed to constrain. It is the same story the Australia Institute has talked about the Improved Native Forest Management ACCU method: an offset built on contested additionality claims, used to launder continued extraction. A forest-biofuel credit would be the aviation sector’s version of the same trick, wearing a different jacket. 

None of this means aviation doesn’t need decarbonising. It clearly does, and we need to fly less – it’s a no brainer. But the answer is not a supply chain built on continuous large-scale wood extraction, wrapped in offset accounting that lets someone else’s smokestack keep running. As the EPN briefing argues, the priority should be rapid electrification, genuine demand reduction, and protecting forests for their intrinsic value rather than converting them, and the credits they might generate, into fuel for the next generation of polluters. 

Louise Morris is an advocate at the Australia Institute, with 20 years’ experience encompassing climate, energy, forest protection, and law reform in the not-for-profit sector, and federal politics.