Gas Transition Loan Guarantee Scheme being established to help businesses move away from gas dependency, Finance Minister says the scheme to make up to $1.2 billion of bank loans available

The Government says it's setting up a Gas Transition Loan Guarantee Scheme, an initiative which aims to help businesses eliminate or reduce their dependency on gas. 

Finance Minister Nicola Willis says the scheme is expected to make up to $1.2 billion of bank loans available to businesses to eliminate or reduce their dependency on gas.

According to the Government, 12 of the 17 currently operational gas fields in New Zealand are expected to stop producing within 10 years.

The announcement, made by Willis, Energy Minister Simeon Brown and Associate Energy Minister Shane Jones on Monday, is a Budget 2026 initiative.

Willis says: “Under the scheme, the Crown will guarantee 80% of each supported loan in return for banks passing on lower interest rates to borrowers. This will make loans more affordable for firms wishing to switch fuel sources."

And $48 million has been set aside from Budget 2026 to cover potential losses from the scheme.

Willis says by helping people move to alternative fuel sources, “the Government can help preserve jobs, improve New Zealand’s economic outlook, and leave more gas available to firms who have no viable alternative to gas.”

To be eligible for the scheme, a business must be a current user of reticulated New Zealand natural gas and have an annual gas consumption of at least 1000 gigajoules (GJ).

The Government says an average household with gas uses about 25 GJ a year for cooking and heating while the country’s 14 largest gas users consume over 300,000 GJ each per year.

Twelve of the 17 currently operational gas fields in New Zealand are expected to stop producing within 10 years.

Loans

Energy Minister Simeon Brown says the Budget also provides $5.9 million for the Energy Efficiency and Conservation Authority (EECA) to work with businesses who choose to look into transitioning away from gas.

Brown says these loans will enable businesses to reduce their energy costs and stay competitive by helping them switch some or all of their processes to run on alternative fuel sources, such as electricity or bio energy, and to invest in other energy efficiency measures."

Businesses that meet the threshold for being part of the scheme could be using gas for things like water heating, food processors and brewers or heating interiors for places like hotels and aged care facilities, or commercial growers using greenhouses, Brown says.

Brown says to access this finance, businesses must achieve genuine gas savings of at least 15% while “maintaining or increasing production, ensuring the focus is on growing the economy and protecting jobs, not shrinking output”.

“EECA estimates that if the full $1.2 billion of lending goes ahead, up to 10 PJ (petajoules) of gas use could be reduced per year.”

The maximum value of a supported loan under the scheme will be $50m of new lending.

Change to the Gas Act

Jones says as part of improving transparency in the gas market, the Government also plans to pass legislation which requires industry participants to disclose to regulators and others, critical information on gas supply and demand.

Jones says: “The most recent figures show a 23 per cent decline in New Zealand’s gas reserves in the past year and production this year is now expected to be 15% lower than expected at the beginning of the year."

“Fragmented and incomplete information on supply and demand is weakening market confidence and contributing to upward pressure on prices.”

“There is no time to waste. A small change to the Gas Act, to require improved information disclosure, will be passed as part of Budget measures," Jones says.