Carbon traders and forest growers say bizarre developments are undermining the emissions trading scheme.
The scheme is supposed to encourage the planting of trees to absorb carbon dioxide.
People who cut forests down have to pay back what they got for carbon absorption while the trees were growing.
The credits originally received were worth $20 per tonne of carbon dioxide absorbed.
The New Zealand Forest Owners Association said growers can now buy credits from Ukraine to replace them for 17 cents per tonne.
As a result, many foresters are buying those credits and using them to quit the ETS cheaply.
In some cases, they say forest growers retain the credits they originally got for planting trees which are worth many more times the amount they are paying to write off emission liabilities.
The association said these people are doing nothing wrong, just behaving logically in a market.
Climate Change Issues Minister Tim Groser says there is no denying the emissions trading scheme is less effective because of current depressed prices, but the Government is monitoring the situation.
Mr Groser said they will have to see how the international price changes over the next few years, and they have just done a major review of the scheme.