Taranaki Regional Council wants the Government to change its definition of a forest so farmers can claim carbon credits for planting trees along streams.
Narrow streamside plantings typically don't match the Kyoto Protocol's requirement for a forest.
The council wants to be able to make an aggregate of the riparian strips and it would act as a regional carbon-credit broker, paying profits to landowners.
However, David Caygill, the head of the Emissions Trading Scheme review, says redefining forests would need a law change, which would be contrary to the Kyoto Protocol.
He says the resulting carbon credits would be worthless internationally and the farmers' profit would create a hole in the country's carbon account that taxpayers would have to fill.