The ban that never had a bridge
In June 2023, the Labour government banned new low-to-medium temperature industrial coal heating devices and set a 2037 deadline for existing coal boilers to be phased out. Industrial process heat accounts for roughly 8% of New Zealand’s total greenhouse gas emissions, with more than half the heat used in dairy and paper production coming from fossil fuels. The policy was projected to cut emissions equivalent to 100,000 cars per year.
It was a clean-sounding target. The problem was always the same: what were these businesses supposed to burn instead?
The answer was supposed to be gas, as a transitional fuel, followed by electrification or biomass. But gas has gone the wrong way. A cabinet paper from Shane Jones revealed that gas production in 2023 and 2024 delivered 12.5% and 17% less than forecast respectively, and that gas would be needed as a transition fuel for “at least the next 20 years, and more likely for longer.” The bridge fuel was collapsing under its own supply constraints before the first boiler was switched off.
Coal imports tripled while the ban was in force
Here is the irony that should have killed the policy months ago. According to MBIE’s Energy in New Zealand 2025 report, coal imports surged 311% from 5.39 PJ in 2023 to 22.15 PJ in 2024. Genesis Energy’s Huntly power station was burning Indonesian coal to compensate for falling domestic gas supply. New Zealand was not decarbonising. It was offshoring its coal dependency while telling industry it could not use the stuff domestically.
Meanwhile, total energy consumption dropped 2.1% to 525 PJ in 2024, driven by a 7.5% fall in industrial energy demand, particularly in chemicals. That is not a clean transition story. It is partly a story of industry shrinking.
$24 billion in GDP had nowhere to go
The BusinessNZ Energy Council quantified the exposure in April 2026. Sectors reliant on gas and coal for process heat generate an estimated $18-24 billion in GDP and support around 264,000 direct jobs, spanning petrochemicals, fertilisers, dairy processing, meat works, wood processing, bakeries, greenhouses, hospitals and schools.
Catherine Beard, BusinessNZ Energy Council Director of Advocacy, did not mince words: “Successive governments have pursued a net-zero goal without a workable transition plan that keeps businesses and jobs intact.” She warned that “New Zealand is already seeing de-industrialisation of manufacturers where the high cost of gas is adding to their struggle to remain competitive and profitable” and pointed to a telling asymmetry: the government has invested $200 million to de-risk new oil and gas exploration on the supply side, but has done nothing equivalent for the businesses that actually use the energy.
Her conclusion cuts to the core: “There’s no point in having a surplus of energy supply in the future if there is no industry left to use it.”
Domestic coal mining is also in limbo
In November 2024, Bathurst Resources paused expansion plans for the Rotowaro coal mine in Waikato due to uncertainty about demand. The mine employs about 200 people and could close after 2030. Environmental groups cheered the news as evidence decarbonisation was working. But Huntly was simultaneously importing Indonesian coal to keep the lights on. The emissions did not disappear. They just moved to a different ledger.
Killing the ban is the easy part
The original policy back in 2021 came with at least a nod toward transition support. The $70 million GIDI Fund co-funded $22.88 million across 14 companies in its first round, helping businesses invest in alternatives. It was inadequate for the scale of the problem, but it was something.
The current government has not replaced it at scale. Scrapping an unworkable ban is defensible. Growers, meat processors, and manufacturers were facing compliance deadlines with no commercially viable alternative fuel and no funded pathway to find one. That is bad policy, and removing it is a correction.
But correction is not strategy. As Beard noted, governments in Australia, the UK, the EU, Canada and Japan are all mitigating transition risks through industry support mechanisms. New Zealand has $200 million for exploration and nothing for the businesses that need to convert. That gap is not a philosophical position on free markets. It is a planning failure that risks replacing climate theatre with industrial neglect.
Sources
- Beehive: Government ban on new coal boilers in place (2023-06)
- Beehive: Government delivers next phase of climate action (2021-04)
- Scoop: Support Transition Before We’re Gone – Latest Gas Report Calls For Govt Assistance (2026-04)
- RNZ: Lack of customers forces Bathurst to pause Rotowaro coal mine expansion plans (2024-11)
- RNZ: Businesses welcome government loan scheme as gas supply runs ever lower