Latest figures from the world's biggest scientific testing and verification company show PNG exported 3.5 million cubic metres of tropical hardwood logs in 2011 - well above the previous record of 3 million cubic metres.
A significant proportion of those exports are coming from controversial Special Agricultural and Business leases or SABL as they are called, that allow clear-felling rather than less damaging selective logging.
Environment groups in PNG are calling for an immediate halt to forest clearance on the leases.
Presenter: Jemima Garrett, Radio Australia's Pacific Economic and Business reporter
Speakers: Bruce Telfer, Asia Pacific Manager, SGS; Tim Flannery, Australia's Chief Climate Commissioner and Professor of Science, Macquaire University; Ken Mondiai, Chairman, PNG Eco-Forestry Forum; William Laurance, Distinguished Research Professor in Tropical Biology at James Cook University
GARRETT: In April, the Papua New Guinea government announced a Commission of Inquiry into Special Agricultural Business Leases after it was discovered that huge tracts of forest had been leased out for 99-years without full knowledge and consent of landowners.
SGS, the Swiss monitoring and verification company that tracks log exports for the PNG government, says its latest estimates show 3.5 million cubic metres of logs will have been exported in 2011.
SGS Asia Pacific Manager, Bruce Telfer, says logs from Special Agricultural and Business leases made a significant contribution.
TELFER: We have got the forest clearance areas form the Special Agricultural Leases that are running at about 19-20% of the total volume, so without that volume we would be just under the 3 million, say 2.8 cubic metres, so it is that extra 20% that has lifted it into record territory.
GARRETT: Australia's Chief Climate Commissioner, and Macquarie University Professor, Tim Flannery, did his formative scientific work in PNG.
He says Australia needs to be concerned about logging there.
FLANNERY: PNG has a problem because it is a very high emitting nation. In population terms, its about a quarter the size of Australia and in land area about one tenth the size or less but it has emissions about one third as great as Australia and that is largely because of deforestation so this is increasingly an issue.
GARRETT: Much of PNG's biodiversity is still being catalogued and you yourself brought new species of tree kangaroo to the attention of the scientific world for the first time. How likely is it that species will be lost before science has had a chance to find them?
FLANNERY: Look, I am sure it is happening right now. It is an exceptionally biodiverse country. Many species have very small distributional areas, very small home ranges and I am sure they are being lost now.
GARRETT: In many cases landowners have not been properly consulted about the letting of Special Agricultural or Business leases and those leases account for 5.5 million hectares of prime land.
Ken Mondiai, Chairman of PNG's 27-member peak Environment Organisation the Eco-Forestry Forum says logging on SABLs is having a devastating impact on communities.
MONDIAI: The impact that we are seeing ..already I have been in East Sepik, in Turupu, it is a coastal community close to a wildlife management area. We have received complaints from the communities to the members of the PNG Eco-forestry Forum that there is no respect for their sago palms, their fishing areas, their coral reefs have been trashed by all the logging machineries. So these are the problems.
GARRETT: Many timber producing countries are scaling back on clear-felling and on the unprocessed exports.
William Laurance, Distinguished Research Professor in Tropical Biology at James Cook University says the latest figures put PNG as the world's second biggest exporter of raw tropical logs.
LAURANCE: The champion, as it were, of tropical log exports has been Malaysia and Malaysia has been progressively exhausting its timber supplies while PNG 's have been increasing so in terms of raw log exports, unprocessed timber, PNG is number two in the world. Malaysia exported in 2010, about 4 million cubic metres. So at 3.5 million cubic metres PNG is pushing very close to the highest of any tropical log exporting country in the world.
GARRETT: Under former Prime Minister, Sir Michael Somare, PNG took on the leadership of a group of developing nations working towards the use of carbon credits as a mechanism for protecting their rainforest.
Climate Commissioner, Tim Flannery, says PNG's credibility is at now risk and Australia needs to be concerned.
FLANNERY: We are all now trying to come to terms with living in a carbon constrained world and every nation needs to shoulder its bit of that, and that includes Papua New Guinea. There are great opportunities for Australia to invest in terms of carbon credits and so forth, in the region, but that can only happen where there is a good legal framework. You know, a firm and clear legislative framework that you can operate within. So there are concerns, and I am far from giving up hope on this, but I do think that there is a big job ahead of us, making sure that we get that clear regulatory framework in place, that respects local land rights and can operate within that.
GARRETT: Australia is spending $273 million on its International Forest Carbon Initiative, which is helping countries get ready for using this sort of carbon credits to avoid forest destruction. PNG is one of Australia's main partners through the PNG Australia Forest Carbon Partnership. Are these record log exports undermining Australia's efforts?
FLANNERY: Look, I am certain about that. I don't know what the government is thinking about that but I could just comment that there are plenty of players out there that want conserve their forests and there are a number of countries, an increasing number, that are getting on top of the problem, who would make very good trading partners. Now, my hope would be that Papua New Guinea would be right up there with the rest and would be benefiting from this but, as I say, that really is a matter for PNG and the PNG government. They need to develop very clear, strong guidelines and a strong legislative framework in which the market can operate.