Businesses welcome government loan scheme as gas supply runs ever lower

Gas supply is running out and businesses are being forced to make tough calls or risk closing entirely, according to BusinessNZ and the Employers and Manufacturers Association.

They - along with other industry groups - are welcoming a new scheme by the government that will allow businesses to secure low interest loans to help them transition away from gas.

While supportive of the scheme, Greenpeace says it's "two years too late", and the New Zealand Green Building Council wants the scheme to go further.

The move was announced by ministers on Monday, along with a promise of a law change forcing the gas industry to provide better information on supply and demand.

Under the lending initiative, the government would guarantee 80 percent of eligible bank loans, allowing banks to offer lower interest rates - by as much as 1.5 percentage points - to companies switching to alternative energy sources.

Finance Minister Nicola Willis said the Budget would put aside a "provisional" $48 million to cover potential losses, unlocking an estimated $1.2 billion in bank loans.

She said a factor in some recent business closures had been the high price of energy to power industrial processes, with tight gas supplies causing some businesses to "shrink or even shut".

"These gas shortages are not of those firms making.

"The previous government's decision to ban oil and gas exploration has left those businesses high and dry."

In response, Labour has consistently pointed to the lack of a significant finding of gas for 25 years.

Head of advocacy for the Employers and Manufacturers Association Alan McDonald said it was a "timely" announcement, because the depth of the problem had become clear, as well as "how fast it's come upon us".

"People are really struggling to get their gas supply.

"We've had people that were literally weeks away from running out of gas with no new supply, and that's not a tenable situation for anybody."

He said the announcement would help businesses who were facing the decision around how to fund and finance their transition away from current gas use.

"It's a financial decision that's being forced upon us. We've got to do it more quickly than we wanted to, so this will help them make that decision and start moving on to other fuel sources."

Director of advocacy for BusinessNZ Catherine Beard said New Zealand's gas supply was "falling off a cliff", and called it a "massive problem".

She said "otherwise actually very viable businesses" through no fault of their own, were suddenly finding that they were very short of a "critical bit of energy to operate".

Beard thought the government's approach was a good one, and it was up to businesses to work out whether it would help them or not.

Some businesses require high heat processes, and would be stuck on gas because they need the speed of the heat and the intensity. But there would be others who could transition and they could end up with a lower operating cost in terms of energy.

Beard said most other countries have an industrial policy to help their businesses transition from old fossil fuels into new cleaner fuels.

"Businesses want a road map, so they want to know what the future holds for them and what the rules of the game are, and then they make those decisions."

New Zealand Green Building Council chief executive Andrew Eagles welcomed the "savvy" initiative, but wanted it to go further.

He called it a "good basis" to then take the next step, which was helping households transition from gas as well.

He described the proposed Ratepayer Assistance Scheme - costing about $8m worth of central government funding - that would allow people to take up a loan to make improvements to their home.

For example, if someone wanted to purchase solar panels and a heat pump, they could do so with the loan and pay it off at a discounted interest rate. If the home was sold before the loan was repaid, the debt would remain with the home.

Eagles said these schemes were established overseas, and enabled people to gain savings from lower bills that would outweigh the costs of the loan, "so you're winning immediately".

Greenpeace's executive director Dr Russel Norman said the scheme was a major admission by the government that the "fairytale" they had been telling the country, that there was more fossil gas, was always "nonsense."

"It's two years too late. They've wasted two years pretending fossil gas was the answer," said Norman.

But he said it was "still great that they finally got there", and that they realised that fossil gas was "very expensive, it's very unreliable, and it's terrible for the climate, and New Zealand needs to get off it".

"So it's great to see them finally read the writing on the wall."

In response to the government blaming the oil and gas ban for the lack of supply, Norman said the coalition had "told a big bunch of lies" about it.

"Because as everybody knows, even if you found oil and gas, and that's a big if, it takes more than a decade between issuing an exploration permit and actually getting the gas to shore.

"So whatever's happening today doesn't really have a lot to do with the decision some time ago to ban new oil and gas exploration," he added.

On the scheme itself, he said if it was providing support and assistance to allow the transition to renewable energy, that was a "very good thing" and should have happened a long time ago.

Gas supply

In March 2025, briefings to ministers showed around $1.8b had been invested in drilling 58 wells in the last five years, and "this investment has not managed to maintain or increase our gas reserves".

"Investments may not all be successful. The risk of failed drilling is high in our mature fields," the briefing stated.

"We need to ensure that, where possible, new fields are developed in addition to investment in existing fields. The development of new fields requires substantial - likely offshore - capital."

A cabinet paper from Shane Jones in May 2025 said New Zealand's domestic gas supply was not adequate to meet demand, and "reserves are falling faster than anticipated".

"While it is impossible to say exactly how long gas will be a needed as the incentives to move away from gas are different for different groups of users, it is clear that some gas will be needed as a transition fuel for at least the next 20 years, and more likely for longer.

"Our gas outlook continues to be below forecast, with 2023 and 2024 delivering 12.5 percent and 17 percent less, respectively, than forecast.

"This problem is not going to go away. Data from the Gas Security Response Group shows a pattern for gas production for winter 2025, which is similar to winter 2024, whereby demand (if unconstrained) will exceed supply."

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