The Tasmanian government made a ''massive strategic error'' that could cost it $7 billion in carbon credits, a climate law expert says.
Australian National University Centre for Law and Climate Policy associate director Andrew MacIntosh said the state government failed to recognise the potential carbon credit windfall delivered by the Tasmanian Forest Agreement signed by the timber industry and environment groups last week.
Under the deal, 504,000 hectares would be protected from logging.
In a forthcoming paper on the agreement, Dr MacIntosh argues that the Commonwealth, which will be required to spend even more than the $261 million already committed to implement the agreement, will instead keep the financial benefits of any carbon credits earned as a result.
The new reserves are estimated to generate up to $7 billion over 20 years if Australia signs the second commitment period of the Kyoto Protocol.
Dr MacIntosh said the state had allowed the process to be dominated by the interests of the forestry industry and conservation groups and missed the opportunity to capitalise on the carbon credit potential.
''They made a massive strategic error,'' he said.
He used letters written by Prime Minister Julia Gillard in 2011 and parliamentary secretary for Climate Change Mark Dreyfus in October this year as evidence that the federal government was unwilling to pass on the ''carbon benefits''.
In Mr Dreyfus's letter to Tasmanian Climate Change Minister Cassy O'Connor last month he wrote: ''The Commonwealth's position is also that there should be no 'double dipping' with respect to carbon credits that may result from forest land entering into new conservation reserves as a result of Commonwealth funding.''
However, Ms O'Connor yesterday rejected the accusation that the state government had ignored the potential benefits of carbon credits.
She said the potential benefits available through the trade of carbon on international or domestic markets was a key consideration.
She said discussions with the Commonwealth on the issue were continuing.