Both major parties have committed during the election campaign to fund $100 million to establish the forestry hub, which will position Australia as a world leader in timber and wood fibre research and development.

It comes as Tasmania was labelled a carbon negative state, a step further than carbon neutral, with many industry leaders planting the success at the feet of the timber industry practices.

University of Tasmania Vice-Chancellor Rufus Black said the National Institute for Forest Products Innovation would support a future where forestry can make its critical contribution to meeting the challenges of climate change.

"It will enable us to build buildings that are carbon sinks and create products from wood fibre that are sustainable and circular," Professor Black said.

UTAS has also established itself as a climate leader, it recently was ranked the number one institution in the Climate ACtion in the Times Higher Education Impact Rankings for 2022.

Professor Black said the ranking showed UTAS was "deeply committed to a sustainable and circular society and economy and wood has a big part in that future."

Australian Forestry Products Association chief executive Ross Hampton said the new institute would be the biggest boost in forest industries research in decades, with industry to provide additional funding and in-kind support.

"Government investment in forest industries research has been in free fall in our nation, with the number of dedicated researchers plummeting from more than 700 to a couple of dozen in the last twenty years," Ross Hampton said.

"As the globe pivots sharply to fibre-based materials to replace plastics and for timber to play a much larger role in high-rise construction, we risk missing out on the enormous opportunities ahead without a vibrant cohort of researchers. The NIFPI is the chance for us to turn that around and secure our place as one of the world's powerhouse forestry nations delivering climate change solutions across the economy and our everyday lives."

The new NIFPI will build on the success of three pilot NIFPI centres - in Launceston, Mount Gambier in South Australia and in Victoria's Gippsland - which were jointly funded by the Federal Government, state governments and industry.