The recent conference on global deforestation held in Sydney co hosted by the Australian Ministers for Environment and Foreign Affairs drew a crowd of ministers, officials from all over the world and international development agencies. Preservation of natural forests was proven to be of particular interest, especially when it is largely believed that deforestation contributes about 20% of greenhouse gas emissions.

The Australian Government committed $200million to a global initiative on forests and climate and will be joined by the US and other countries.

Malcolm Turnball, Australian Minister for the Environment was quick to point out that Australia's contribution will focus on "practical measures", such as the promotion of better forest management, plantation of new forests and the use of remote-sensing technology to monitor the progress of deforestation in Indonesia, the Philippines and Pacific nations.

However, the truth remains that sustainable forest management in natural forests in the tropics is very often simply not as rewarding economically as the combination of rapid logging and conversion of the land to other uses.

At the recent high-level meeting, Turnbull estimated that for Indonesia alone halving its current rate of forest loss could be worth $3 billion a year in retained carbon value.

But the bottom line is someone has to pay for the carbon emission prevented all of it for this to become a reality, and who could or would?

The Stern report, strongly encourages reductions to happen as soon as possible, before costs becomes prohibitive.

The answer is that high greenhouse gas emitting industries could, with the proper incentives to do so. One possible example is the Australian coal-fired energy sector.

Current projections of coal consumption for power in Australia suggests that by 2030 about 50% more coal than is presently being used will be consumed. However, should the consumption of coal follow the trend needed for it to play its proportional part in reducing Australia's level of greenhouse gas to 50 or 60% of current levels by 2050, then by 2030, to be on track, consumption would have to be down to about 75% of present levels.

If the coal industry was to begin buyin avoided deforestation credits from Indonesia, to offset the difference between its actual use of coal and the amount it would have to reduce to meet targets, it would need to buy about 60,000ha of avoided deforestation credit in the first year, and this would increase quickly to an impressive 1.4 million ha or so by 2030.

As the demand for offset carbon supplies grows, the price paid for that carbon may rise from $15 currently to $45 a tonne by 2030. Prices of electricity from coal would increase by about 3.8% in 2015, 8% in 2020 and 20% in 2030.

This increase in prices would be low compared to 40 - 100% price hikes for electricity that would be needed by nuclear power, one of Prime Minister John Howard's favoured options.

Under the catalyst of emission targets, lower emission alternatives for power, in the form of natural gas and geo-thermal options, wind, solar and other technologies, would gain greater market share, and the coal industry might eventually crack the clean coal problem.

The avoided deforestation option should be seen as an interim strategy, buying natural forests in Indonesia time in the medium term while allowing Australia to address its emission issues.

From Indonesia's point of view, reducing deforestation will by no means be a low-cost exercise.

For a country to be able to sell carbon from avoided deforestation, total levels of forest loss in the entire nation must come down. This would require a broad international undertaking to implement a viable global market for avoided deforestation, which probably means that a Kyoto-style international treaty will be required. Developed nations would also have to show their own commitment as potential buyers of the carbon credits. This would be in the form of serious measures that will require greenhouse gas emissions to begin falling in line with international target levels.