New low to medium temperature coal burners will be banned in New Zealand from next year, as part of a wider phase-out equivalent to taking hundreds of thousands of cars off the road.
The announcement comes after the launch of a new $70m fund last year to help companies switch from coal and gas to clean energy for process heat.
Used by industries to manufacture products, such as converting milk into powder and wood pulp into paper, process heat accounts for around 8 per cent of New Zealand's greenhouse gas emissions.
It also made up around 17 per cent of emissions covered under New Zealand's 2050 net zero target, and remained the second largest source of energy-related emissions after transport.
The ban on new coal boilers used in manufacturing and production would come into effect by December 31, but didn't cover new large-sized ones.
That was because industries with high-temperature requirements generally used energy in a way that was highly integrated into their plants, meaning there were fewer low carbon opportunities.
These types of industries, like steel, would be able to use coal provided they are complying with best practice and had an emissions plan in place.
Still, the Government was considering an option to also ban other new fossil fuel boilers where suitable and economically viable alternative technology was available.
More widely, it was proposing to phase out existing coal boilers by 2037, while looking at how to phase out other fossil fuels in existing sites through re-consenting processes and best practice requirements in a National Environment Standard.
Energy Minister Megan Woods said the amount of coal displaced by the proposals equated to around 500,000 tonnes each year.
"Once the changes are fully in place it will mean the equivalent of between 400,000 to 550,000 cars being removed from our roads in a single year."
The Government also announced today 14 successful applicants for the first round of the Government Investment in Decarbonising Industry (GIDI) Fund, which will receive around $22.8m in co-funding to help make the switch.
"The decarbonisation fund provides crucial financial support to business and industry to help them switch from boilers run on coal and gas to cleaner electricity and biomass options," Woods said.
Today's move marked the Government's first major climate announcement since the Climate Change Commission published its landmark draft advice on how New Zealand could meet decarbonisation targets.
Its report suggested low and medium temperature heat in industry and buildings could be decarbonised by 2050, through a switch away from coal, diesel and gas to electricity and biomass.
Its analysis indicated these costs could range up to $250 per tonne CO2-e (carbon dioxide equivalent) reduced - but would be less than this where heat pumps or biomass can be used.
But the commission acknowledged some activities - notably industrial processes that use high-temperature heat - would be hard to electrify.
Nonetheless, slashing pollution from process heat, it found, would be "critical" for meeting the 2050 target.
The commission's budgets required the use of coal in boilers to come down by around 1.4PJ a year - roughly the equivalent to the energy used by one very large dairy processing factory.
By 2035, under the commission's suggested budgets, emissions would ultimately have to come down by 2Mt of CO2-e - with the bulk of those cuts required by the decade's end.
Current barriers to doing that included the time required to convert plants and establish or expand fuel supply chains, as well as to upgrade grid infrastructure and build new renewable electricity generation.
The challenge also spelt out the need for a range of new cleaner energy sources.
While bioenergy and hydrogen both held promise, New Zealand first needed to understand how best to make use of their potential.
"Our analysis indicates that these fuels have significant potential for reducing emissions in transport, process heat and industrial processes," the commission found.
"However, more work is needed to support establishing supply chains and infrastructure and making them more cost-competitive."
A long-touted "bioeconomy" could only be realised if the Government provided direction on the priority uses of bioenergy, signalled the optimal scale of a system, helped overcome barriers, and offered investment and procurement support.