The $100 million dollar scheme was launched in 2007, but nearly five years on, less than a third of that amount has been committed and the projects targets have been drastically reduced.

STATE-OWNED timber agency VicForests has been hit with court action by the Environment Department after it allegedly logged protected rainforest.

TONY EASTLEY: When the Prime Minister and the Tasmanian Premier signed a forestry agreement last year it appeared that an end was in sight to the protracted and bitter Tasmanian forestry debate.

This morning however the deal would appear to be in tatters.

Felicity Ogilvie reports from Hobart.

FELICITY OGILVIE: The timber company Ta Ann's announcement that it will cut up 40 jobs as a result of environmental groups lobbying against it has thrown the Tasmanian forest peace deal into disarray.

Landholders spiralling interest in carbon forests has resulted in CO2 Australia investing an estimated $23.3 million in rural economies during 2011 and partnering with more than 300 farming families.

The Australian House of Representatives Standing Committee on Agriculture, Resources, Fisheries & Forestry has issued the findings of its inquiry into the forestry sector.