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This paper shows how the prospect of a forest carbon market in Papua New Guinea added a new element of instability to national forest policy and property processes that were already moving in contradictory directions. In particular we examine attempts by foreign investors to forge voluntary carbon agreements with customary landowners after the Bali climate change conference of 2007, and the mobilization of state institutions to counter these ‘private dealings’. We highlight the connection between the ways that these processes played out at both national and local scales, with a focus on the highly contentious Kamula Doso forest area in Western Province. We conclude with some observations on the way that the constitutional protection of customary land rights inhibits the formalization of marketable rights in forest resources, including forest carbon, and creates an inconclusive circularity in the operation of forest policy and property processes at different levels of social and political organization.