Most of the habitat of Australia's threatened species isn't being protected by a federal government scheme designed to reduce carbon emissions or store carbon.
The first national assessment of the Australian Carbon Credit Units Scheme (ACCU) by James Cook University researchers shows species most in need of habitat protection are least likely to get it.
Launched in 2011 as the Carbon Farming Initiative, the scheme supports projects which avoid releasing greenhouse gas emissions, or remove and sequester carbon from the atmosphere.
Thirteen years after its launch, researchers say these projects are primarily located on marginal arid and semi-arid areas, which support habitats for just six per cent of Australia's threatened species.
"Where ACCU Scheme projects are most needed - in privately owned agricultural land that is cleared of habitat - they are small and few," Associate Professor Penny van Oosterzee said.
"Yet this is where most of Australia's threatened species are.
"The bottom line is the carbon projects are not where threatened species are, so they are doing little for conservation."
Australia holds a world-first market for biodiversity known as the Nature Repair Market.
Prof Oosterzee says nature repair projects should learn from these findings and aim to protect populated and productive areas that are rich in species.
"Speeding up the environmental law reform agenda is crucial. Nature repair projects should be underpinned by regulations that prevent further destruction and be aligned with national priorities for biodiversity conservation," she said.
"Currently ACCU Scheme projects discriminate against small projects that work toward protecting areas of high threatened species richness because of the high cost of restoration.
"There is, however, a silver lining: where ACCU Scheme projects do occur, they can supplement national park conservation.
"ACCU Scheme projects overlap the geographic range of a third of the 1660 threatened species, and some threatened species are only protected within those projects."
Research from Prof Oosterzee and PhD candidate Jayden Engert is published in the scientific journal Nature Ecology and Evolution.
