A forestry lobby group has challenged the Government's view that proposed changes to the emissions trading scheme will encourage tree planting.
The Kyoto Forestry Association says Climate Change Minister Nick Smith is right to acknowledge that New Zealand will keep its Kyoto Protocol account in credit only because of additional forestry plantings in the 1990s.
However, association spokesperson Roger Dickie says Dr Smith is wrong if he thinks plans to water down the emissions trading scheme will lead to the private sector resuming tree planting.
Mr Dickie says the biggest turnoff for potential investors is the indication that the Government will put a cap on the price of carbon.
"The difficulty is that the Government wants to harmonize with Australia, which is understandable, but Australia is talking about a fixed price on carbon," he says.
Mr Dickie says investors will not be interested in putting money into forestry when there's a cap on the price at which they can sell their carbon.
He says a carbon price cap would restrict the ability of foresty investors to sell their credits on the international market, which they need to do because the domestic market is likely to be limited by the Government agreeing to delay or exempt other sectors, such as agriculture, from joining the emissions trading scheme.