Businesses that burn natural gas can start applying for government-backed bank loans to switch to something else, with the Gas Transition Loan Guarantee Scheme opening for applications on Friday. Five banks are taking part, and the Crown is carrying most of the risk.
Finance Minister Nicola Willis, Energy Minister Simeon Brown and Associate Energy Minister Shane Jones announced the opening on 31 July. ANZ, ASB, BNZ, Kiwibank and Westpac will process applications, and the Crown will guarantee 80 per cent of the default risk on each loan it supports. The Government expects that to unlock up to $1.2 billion of lending.
“Businesses across New Zealand are facing higher gas prices and greater uncertainty about future supply,” Willis said in the release. “Under the Gas Transition Loan Guarantee Scheme, the Crown will guarantee 80 per cent of the default risk for eligible loans.”
The mechanics are straightforward enough. A business goes to its bank as it normally would. If the loan qualifies, the Crown stands behind four fifths of it, which lowers the bank’s exposure, and the bank is expected to pass that saving through as a cheaper interest rate. When the scheme was announced alongside Budget 2026, officials estimated the discount at up to 1.5 percentage points, according to interest.co.nz. Budget 2026 set aside $48 million to cover expected losses, which is the actual cost to taxpayers if some of the loans go bad.
Individual loans are capped at $50 million. The scheme itself runs for three years, with loans repayable over up to ten years on terms agreed with the bank, and it covers new borrowing rather than refinancing of existing debt.
Not every gas user can apply. A business needs to be a current user of reticulated natural gas consuming at least 1,000 gigajoules a year, which 1News reported is roughly forty times what an average household gets through. The project also has to deliver genuine gas savings of at least 15 per cent while maintaining or increasing production, so a firm cannot qualify by simply making less of whatever it makes. Thousands of businesses meet the threshold on paper, among them food processors, brewers, hotels, aged care facilities and commercial glasshouse growers.
The reason any of this exists is that the gas is running out faster than the industries built on it can adapt. New Zealand’s reserves fell 23 per cent in a single year to a record low, the Maui field is winding up production at the end of 2026, and most of the country’s producing fields are expected to stop within a decade. Demand is forecast to exceed available supply by around 10 petajoules this year and roughly double that next year.
Brown used the announcement to place the blame squarely on the previous government. “Since the last government banned oil and gas exploration, there has been a significant reduction in natural gas supplies,” he said. “New Zealand wants to export our goods, not our jobs and this loan scheme is a practical way to help businesses.”
That framing is contested, and it sits alongside the coalition’s own supply-side response. The Government reversed the 2018 exploration ban and has been running new permit rounds, with the first offshore permit since the reversal granted to an Australian explorer off Taranaki earlier this week. Even on the most optimistic timeline, though, a new discovery would take years to reach a factory boiler, which is why the loan scheme exists in parallel rather than instead.
Jones framed it as a regional jobs question. “Many of our regional economies are built on energy-intensive industries such as food processing, wood processing, manufacturing and horticulture,” he said.
Industry groups were pushing for something like this well before it arrived. When the scheme was announced in May, Employers and Manufacturers Association head of advocacy Alan McDonald told RNZ that “people are really struggling to get their gas supply”, adding that “we’ve had people that were literally weeks away from running out of gas”.
The criticism has come from the other direction. Greenpeace executive director Russel Norman told RNZ the scheme was “two years too late”, while welcoming the direction. The New Zealand Green Building Council called it a good basis but wanted the same kind of help extended to households still connected to gas, who face the same shrinking supply with none of the bargaining power of a large industrial user.
There is also a practical problem the loan guarantee does not solve. Research commissioned by the Energy Efficiency and Conservation Authority with 25 small and medium gas users found the biggest barrier was not finance at all but uncertainty, over how long gas will be available, whether rationing is coming, and how high prices will go. Many run specialist equipment with no cheap electric equivalent, and switching can mean ripping out working plant and paying for a grid connection upgrade on top of the new boiler. Budget 2026 gave EECA $5.9 million to help with that side of it, through energy assessments, feasibility studies and regional workshops for businesses weighing up whether a project stacks up before they borrow against it.
Energy is shaping up as one of the sharper dividing lines of this year’s campaign, with the coalition arguing that more exploration and cheaper transition finance will hold industry together, and the opposition parties arguing the country should be spending that money on getting off fossil fuels for good rather than underwriting the retreat from them. If you are still working out where the parties actually sit, our voting tool lets you compare their positions side by side.
Details on eligibility and how to apply are available through Treasury and through the five participating banks.
Does the Government have the balance right between backing new gas exploration and paying businesses to move off gas altogether? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply