Kiwi companies are being encouraged to make use of a new $70m fund to switch from coal and gas to clean energy for process heat.
Process heat makes up a quarter of New Zealand's energy-related emissions - and the new fund, formally launched by Prime Minister Jacinda Ardern in Taranaki this morning, will target the country's biggest energy users.
Administered by the Energy Efficiency and Conservation Authority (EECA), the fund will be available to businesses that can demonstrate they're committed to decarbonising, and where the funding will help them do so.
"Successful applicants will likely already have a plan in place to decarbonise their process heat, and will be able to demonstrate value for money as well as their contribution to the economic recovery by boosting economic activity and providing local employment," Energy Minister Megan Woods said.
"We're requiring New Zealand businesses to implement these projects quickly, not only to get the benefits of lower greenhouse gas emissions and greater economic activity, but to demonstrate to industry across New Zealand that there are proven viable solutions to their clean energy needs."
A minimum of $15m is available in the first round, which opens today with a December 14 deadline for proposals.
Ardern said slashing greenhouse gas emissions from process heat was a "win win" for New Zealand's climate efforts, and its recovery from Covid-19.
"It provides much needed financial support to business to assist with the often costly transition of plant and equipment to clean energy sources.
"The Interim Climate Change Commission recommended a focus on lowering emissions from process heat as a priority for decarbonising our economy."
Professor Dave Frame, director of Victoria University's New Zealand Climate Change Research Institute, said co-investing with business to move away from fossil fuels was an "excellent idea".
"It's good to see the Government targeting process heat - it's an important contributor to energy sector emissions, and it's an area where alternatives are often available.
"There is a good case for the Government chipping in, too: we and future generations of New Zealanders benefit from reducing CO2 emissions, so it's quite reasonable that we and future generations of New Zealanders chip in to help businesses make these important but sometimes costly changes."
Massey University climate and energy expert Emeritus Professor Ralph Sims said the fund was "long overdue", given current industrial heating systems have become technically mature and largely economic.
Many countries such as Austria, Denmark, Sweden, Finland, UK and the US have successfully been using woody biomass residues from forests and crops for providing industrial heat for decades, he said.
"Given these are residues, they are carbon neutral as any CO2 emitted during their combustion will in effect be reabsorbed by replanting the forests or growing more crops.
"So long as the biomass does not result from deforestation activities or growing crops for biomass that might displace food costs, it is an acceptable energy source – that can also be stored."
Thermal electric technologies - such as high temperature heat pumps - were well proven too and already being used or planned in New Zealand, such as by Synlait for milk drying in one of its plants.
"Given our electricity is largely renewable generation, the carbon emissions are very low," Sims said.
"Biomass heat is also evident here with, for example, several schools and heated greenhouses in the South Island - where there is no natural gas supply - recently converting from coal to biomass."
Sims said the key was to ensure a reliable supply of biomass fuel could be contracted over the medium term to give security of supply.
"The Government support through EECA will overcome some reticence expressed recently by the horticulture industry, inter alia, about moving too quickly and the costs involved.
"We, like all other countries, simply have to find alternatives to burning coal now."
The new fund is separate to the $200 million State Sector Decarbonisation Programme launched in January, which supports decarbonisation programmes within the public service.
To date, almost $80m in funding has been committed, with expected annual emissions reductions of 26,000 tonnes once these projects are completed.
Today's announcement comes after Labour pledged to decarbonise the public transport bus fleet by 2035, and to replace coal boilers with electric alternatives ahead of the election.
Ardern also committed to boost funding across agricultural greenhouse gas programmes by $6 million a year.
Elsewhere, Labour planned to introduce a vehicle fuel-efficiency standard for new and used light vehicles entering the fleet, and extend the current road-user charge for heavy electric vehicles after 2025 and extend other low-emission power sources, such as hydrogen.
Commentators welcomed those new emissions standards - but pointed out they won't apply to the large majority of vehicles in what was the OECD's oldest car fleet.
Labour has also signalled it wants to transition to clean energy through 100 per cent renewable electricity by 2030 - a goal some experts have doubted is possible.
The Government has already driven through a ban on new offshore oil and gas exploration, a series of tweaks to the Emissions Trading Scheme (ETS), and introduced the 2050-focused Zero Carbon Act.
But while Ardern has hailed climate change as this generation's "nuclear free moment", environment groups have been widely critical of falling short on meaningful action.
That included failing to bring in repeatedly recommended "feebate" schemes - although its Clean Car Standard would achieve some of the same impact when it arrives in 2025 - and there's no sign of any future ban on fossil fuel vehicles more generally.
Along with walking away from a previous pledge to electrify the government fleet by 2025, the Government has drawn scorn in opting against bringing agriculture - our biggest emitting sector - into the ETS, in favour of an industry-government partnership.
And if agriculture is eventually forced into the ETS, that won't happen until 2025, when it would receive the same 95 per cent discount deal "carbon-intensive" industries like steel have been given.
It already looks unlikely New Zealand's climate pledges under the Paris Agreement will be strong enough to meet the UN's aspiration to limiting warming below 1.5C.