The Ministry for Primary Industries is contributing $1.9 million from the Sustainable Food and Fibre Futures fund towards the $4.9 million dollar programme.
Agriculture Minister Damien O'Connor hoped the research would benefit the strong wool sector and help keep carpet manufacturing in the country, preserving jobs.
O'Connor said the rise of synthetic carpets in the last few decades had severely affected the wool industry.
"I'm told that an average Kiwi household laid with synthetic carpet is estimated to have the equivalent weight of 22,000 plastic shopping bags on its floor. That's a compelling reason to use sustainable wool wherever we can to make healthy homes for Kiwis and the world.
"We believe this programme will spur demand for New Zealand strong wool and enhance our manufacturing competitiveness through strong environmental credentials that challenge industry norms."
Bremworth chief executive Paul Alston said the programme would also look at how it could make the manufacturing process more sustainable.
"It's full look at sustainability, [including] how we make the carpet and also what that means for end of life," he said.
"We've signalled the change that we are no longer going to be producing plastic carpets and we are going to be a wool only, or natural fibre company and this is an important part of that process."
- RNZ
