Gigablue sold 200,000 carbon credits on unverified technology

New Zealand wants to be a home for green innovation. It does not want to be a place where the law gets rewritten because a startup raised venture capital and pre-sold carbon credits on a technology nobody has been able to prove works.

That is the clear message from the government’s refusal to change the country’s exclusive economic zone rules for Gigablue, the Israeli-founded marine carbon storage startup. On 22 September 2026, RNZ reported that ministers had said regulatory changes were not warranted, and that “robust evidence” would be needed before they would even reconsider. For climate-tech investors, it is a useful and slightly uncomfortable test case.

What Gigablue wanted

Gigablue asked officials to classify marine carbon dioxide removal with “low or negligible impact” as a permitted activity requiring no consent, and to make larger commercial deployments “non-notified” – consent required, but no public hearing. In a stakeholder document supplied after its March 2026 trial, the company warned that “the need is urgent” and that without a workable framework before the 2026/27 summer, it would not be able to keep operating here.

The company’s method involves growing phytoplankton on proprietary cellulose particles embedded with iron and manganese, which are designed to sink to the deep ocean floor and lock away carbon. Gigablue argues this is distinct from the internationally prohibited practice of ocean fertilisation because the phytoplankton grows within the particles rather than through dumping nutrients into open water.

What officials actually found

A June 2026 briefing to ministers, released under the Official Information Act, was blunt. Officials concluded the method “is likely a form of ocean fertilisation,” which “poses potentially long-term, severe, and widespread environmental risks” including harmful algal blooms, oxygen depletion and altered food webs.

More damning for the business case, officials said they had “not seen any evidence” the technology could sequester carbon dioxide from the atmosphere for any period of time, transport phytoplankton to the seabed, or that verifying any sequestration was even possible. Trials have so far been unable to track the particles into the deep ocean.

The money moved faster than the science

Here is the part that should make investors sit up. Gigablue has already pre-sold 200,000 credits to an aviation company, and as of April 2026 had signed an agreement with aviation services provider SkiesFifty to sequester 200,000 tonnes of CO2 by 2029 and raised US$20 million in venture capital.

All of that commercial machinery was built on a technology New Zealand’s own government scientists could not confirm does anything. The voluntary carbon market funded and priced a product before it was validated. That is the real lesson for corporate carbon buyers writing cheques against future removals – the credit can exist on a balance sheet long before the carbon is anywhere near the seabed.

A pattern of scaling back

Gigablue has operated here since at least 2023, and the EPA allowed three small sea trials since 2024 as permitted scientific research. But the regulator rejected a much larger plan to deploy 1,000 tonnes of particles off Otago in late 2025, ruling it amounted to illegal marine dumping. The March 2026 trial shrank to five pens holding just 55kg of particles in the Bounty Trough, and ended early after storms damaged the equipment.

Marine science and law experts who spoke to RNZ in April 2026 called Gigablue’s published methodology a good early step but insufficient on its own, and questioned whether the work had quietly moved from research into commercial activity given the intent to sell credits.

The door is open, but only to evidence

The government has not slammed the door on marine carbon removal. It has built a CCUS framework, set out in MBIE’s December 2024 policy approach, and the Ministry for the Environment published a May 2026 guide for companies seeking science assessments for carbon removal. In its 2024 submission to MBIE, Gigablue itself argued buyers and investors would be more comfortable if the activity was clearly legal and welcomed by government.

The pathway exists. It just demands rigorous proof rather than a regulatory shortcut. With no applications lodged since March 2026 and the government’s position now formal, Gigablue’s self-imposed summer deadline looks likely to pass unmet. That is the line New Zealand has drawn – genuine research gets support, but no amount of raised capital or urgent messaging buys a fast lane for the unproven.

Sources

• Start-up Gigablue denied law change to push ahead with controversial marine carbon storage (2026-09-22)
• Start-up asked for regulation changes to allow controversial marine carbon storage (2026-04-01)
• Marine carbon dioxide removal is a big idea – with big hurdles (2026-04-01)
• Racing into climate change solutions is risky business (2026-04-08)
• How to Seek a Science Assessment for a Carbon Removal Activity (2026-05)