For owners of post-1989 forests, the ETS presents a valuable new opportunity to make money from carbon sequestration.
However with that opportunity comes risk.
While you can claim and sell carbon credits as your forest grows, you will have to surrender credits back to the Government after you harvest; or sooner, if your forest suffers an adverse event such as fire or wind throw.
Unpredictable carbon prices mean that if you sell carbon credits today, you might find the cost of ETS surrender obligations exceeds the value of carbon revenue you've accumulated up to that point.
If that happens, you were probably better off not trading carbon at all. You might even find it's uneconomic to harvest your timber crop.
This dynamic can also lead to problems where the ownership of a forest and land is shared, say, through a forest right or a syndicated partnership. Once carbon revenue is distributed amongst different parties, there are risks in relying on each other to meet ETS liabilities if they emerge.