MPs are bracing themselves for a marathon session this week under urgency to pass a law amending the ETS put in place by Labour.
None of the other parties support the bill and Dr Smith needs the Maori Party's five votes to get it through.
The Maori Party is representing iwi interests and is concerned about protection for iwi-owned forests under the scheme.
A key concern is that Ngai Tahu and four other iwi who settled Treaty claims feel the settlement did not take into account that the ETS would change their forests' value and they were not consulted about the possibility.
"We are hopeful of being able to make an announcement today," Mr Key said on TVNZ's Breakfast programme.
"Maori are not getting special preference, if you go back to those pre-1990 forests Maori are significant owners in that area, so is Ngai Tahu, those forests are all affected by the emissions trading scheme."
Crown Law advice was that the settlements were sound but the Government disagreed with that.
"The advice we've had is there could be some legal risk there, and so it is possible we will agree a deal with Ngai Tahu."
One element would be allowing Maori to plant trees on conservation land for a certain period of time and obtain carbon credits for those.
The deal was worth no where near figures, such as $2 billion, which have been bandied around, Mr Key said.
"Probably the costs of going to court would be much greater for the Government."
The previous Labour Government had obtained a valuation of the cost of an ETS to the forest owners and what their claim could be which came in at $78m-$130m.
"All I can tell you is if we were to agree a deal with Ngai Tahu and the other four iwi it would be for considerably less than that," Mr Key told NewstalkZB.
Iwi leaders reportedly said the deal would be worth about $50m.
The ETS is a modified version of the one passed by the previous government just before last year's election.
National put it on hold, reviewed it and produced a modified version which is easier on big polluters and won't cause energy and petrol prices to rise as much as they would under the existing ETS.
The ETS will eventually bring all sectors of the economy under a regime designed to reduce greenhouse gas emissions through a carbon trading scheme.
