The government announced a Gas Transition Loan Guarantee Scheme on 25 May 2026 to support up to $1.2 billion in bank lending for businesses reducing natural gas use.
The scheme uses Crown guarantees on 80 percent of eligible loans instead of direct grants. It allocates around $48 million in Budget 2026 to cover potential defaults. This approach limits taxpayer exposure compared with the former Government Investment in Decarbonising Industry fund.
The scrapped GIDI programme, according to the International Energy Agency, disbursed NZD 355 million in government co-funding matched by over NZD 890 million in private investment across 119 projects. Critics had labelled it corporate welfare.
Eligible businesses must use at least 1,000 GJ of reticulated natural gas annually. They must achieve at least 15 percent genuine gas reductions through efficiency or fuel switching while maintaining or increasing output. A $50 million maximum applies per borrower.
Who is eligible — and how the money flows
The scheme targets thousands of firms in food processing, brewing, hotels, aged care and greenhouse horticulture. Loans will run at arm's length from government. Banks retain credit risk on the unguaranteed 20 percent.
Finance Minister Nicola Willis said the scheme makes loans more affordable for firms wishing to switch fuel sources. She also said:
"The Gas Transition Loan Guarantee Scheme is a practical, helpful Budget 2026 initiative which is expected to make up to $1.2 billion of bank loans available to businesses to eliminate or reduce their dependency on gas."
Energy Minister Simeon Brown said projects must deliver genuine savings without cutting production.
Reserves at a 20-year low
New Zealand's 2P natural gas reserves stood at 731 petajoules as at 1 January 2026. This marked a 23 percent year-on-year drop to the lowest level in 20 years, according to MBIE data.
Average deliverability from major fields fell 13 percent in 2025 to 285 TJ per day. Production has more than halved over the past decade.
EECA support and the Gas Transparency Bill
The government will also allocate $5.9 million to the Energy Efficiency and Conservation Authority for expert advice. It plans to introduce the Gas Transparency Bill to improve supply and demand data disclosure.
Westpac NZ welcomed the scheme. The Auckland Business Chamber also expressed support.
The scheme is expected to become operational from July or August 2026 and run for three years. Loans will typically be repayable within 10 years.
Hard calls remain in the detail
Final design details for the Gas Transparency Bill and actual uptake among eligible sectors will determine whether the guarantees deliver the intended transitions. Banks will make individual lending decisions under the 80 percent Crown backstop.
No comment was received from opposition parties or independent fiscal analysts before deadline. Critics of the broader policy direction have previously questioned whether Crown-backed loan guarantees represent a meaningful departure from government underwriting of private risk — a concern the scheme's architects acknowledge by capping the taxpayer backstop at approximately $48 million in contingent liability.
