A proposal to mine peat at Kaimaumau in the Far North would damage a nationally significant wetland, says the Green Party.
Private company RWL hopes to mine land bought recently by the iwi Ngai Takoto, for the resins and waxes contained in peat.
An earlier peat-mining venture in the area in the 1980s failed, but the company said machinery had now been invented that could do the job.
Its mining license covers 1450 hectares, but it said the area it would dig up was a wasteland of wattle and weeds - and it would steer well clear of neighbouring Department of Conservation (DOC) wetlands.
But Green Party environment spokeswoman Eugenie Sage said the idea was horrifying.
"Kaimaumau's a nationally significant wetland. If the area has been damaged by past land use, there is still the potential for it to regenerate to wetland," she said.
"We need to be protecting our wetlands when Northland's got less than 5 percent remaining."
RWL was looking for a grant from the Northland Regional Council's Investment and Growth Reserve for the final tests needed to get the project over the line and ready for investors.
It said it would build a plant on the land owned by Ngai Takoto, and train up local people for about 30 jobs the project would create.
And its application was supported by the council's economic development agency Northland Inc.
Council chair Bill Shepherd said the funds, if granted, would come from the council's Investment and Growth Reserve.
The Reserve is funded by the council's commercial investments, and was allocated $1.7 million for three years in the council's latest Long Term Plan.
Mr Shepherd said if the council did decide to invest in the peat mining project, it would do so at a closed meeting.
"Quite often the detail of those proposals have commercially sensitive information within them," he said. "So they have to be dealt with in confidential fashion. But any decision that council makes to approve funding then becomes public knowledge. "
Mr Shepherd said if the peat mining venture needed resource consents from the council, it would appoint independent commissioners to hear the applications.
But Ms Sage said the idea of the council backing peat mining was unacceptable on two counts.
"It's public money. There needs to be transparency.
"And fundamentally, it's a conflict of interest. If the regional council is to apply the Resource Management Act (RMA) properly, it needs to be objective. If it's funding development on the one hand, and administering resource consents on the other, it's a conflict of interest."
Ms Sage said councils had an obligation under the RMA to protect wetlands, but the way the Northland council applied the rules meant wetlands were being plundered and the law was not properly applied.
The Far North Environmental Protection society, which campaigns against swamp kauri mining, agreed. President Fiona Furrell said peat mining would be the last straw for Kaimaumau.
"It has 11 nationally endangered species on it, which should be enough of a signal to start with, not to proceed. It has never been productive farmland, because it has always been the Kaimaumau wetland. It is the biggest wetland Northland has left, and it is hugely significant. It is certainly not the place for open-cast strip-mining," she said.
In the end, the the future of the peat-mining project may depend on the view of the landowners - Ngai Takoto.
The runanga's chief executive Rangitane Marsden said if peat mining could not be carried out without risk to adjoining valuable wetlands, and DOC reserves, the iwi was unlikely to give its consent.
"But the difference between where they're going to do this peat-mining, and where those wetlands are, is huge," he said.
"You know, there is a huge gap. So what we're looking at is, if we are going to go into business, (with RWL) how do we work the two together? Because our wish is to improve the wetlands environments, as opposed to just letting them go the way they are. "
The Regional Council said it was not sure yet when it will be dealing with the RWL request for funding , but said it would not be this month.