New Zealand Sets Aside $30m to Grow Hydrogen Energy Sector

The funding is expected to support projects capable of expanding the country’s hydrogen sector and developing skills and expertise across the wider energy industry.

The New Zealand Government has earmarked $30 million from the Regional Infrastructure Fund to support hydrogen projects, putting fresh public funding behind an energy technology that could play a bigger role in heavy transport, industrial production and regional economic development.

Regional Development, Resources and Associate Energy Minister Shane Jones announced the funding at a hydrogen sector hui in Christchurch, describing hydrogen as a potential addition to New Zealand's renewable energy mix that could improve energy security while creating new opportunities for businesses and investors.

The funding is expected to support projects capable of expanding the country's hydrogen sector and developing skills and expertise across the wider energy industry. Kānoa – Regional Economic Development & Investment Unit will assess existing Regional Infrastructure Fund applications for possible support where they meet the package criteria, while new hydrogen applications will also be considered until the $30 million allocation has been committed.

Hydrogen could fill gaps where batteries are less practical

Hydrogen is being considered for parts of the economy where direct electrification may be difficult or less suitable, particularly activities requiring large amounts of energy, extended operating ranges or specialised industrial processes.

Heavy transport is one area highlighted by the Government because battery size, weight and driving range can create challenges for some vehicles and routes. Certain heavy industries could also use hydrogen where manufacturing requires very high temperatures or chemical reactions that are difficult to achieve through conventional electrification.

Jones said New Zealand needs a broader range of energy options to support economic growth and make its energy system more resilient. Hydrogen could work alongside the country's existing renewable electricity resources rather than replacing them, giving industries another option when electricity alone cannot easily meet their operational needs.

Government explores natural and rock-generated hydrogen

The new funding follows the Government's Hydrogen Action Plan and comes while officials examine possible regulations for white and orange hydrogen, two emerging forms of hydrogen production that differ from more established manufacturing methods.

White hydrogen, also known as natural hydrogen, occurs naturally underground. Orange hydrogen involves stimulating certain types of rock to generate hydrogen below the surface, an emerging approach that has attracted interest as countries search for new sources of lower-emission energy.

The Government believes New Zealand could participate in the developing white and orange hydrogen industries, though Jones said investors need clear and predictable regulations before committing significant capital to projects.

He expects to seek in-principle Cabinet decisions on a regulatory framework in the coming weeks, providing greater clarity around how exploration and development could operate in New Zealand.

Regional investment could build a new energy industry

The $30 million package has a strong regional development focus, with the Government looking for projects that can encourage innovation, build industry capability and attract private investment alongside public funding.

Developing a hydrogen industry could involve more than producing the fuel itself. New projects may create demand for specialised infrastructure, engineering expertise, storage and distribution systems, transport technology and skilled workers, giving regional economies opportunities to participate at different points in the hydrogen supply chain.

The funding also reflects a wider effort to strengthen New Zealand's energy resilience by avoiding dependence on a limited number of technologies. Hydrogen remains an emerging part of the country's energy system, and its eventual scale will depend on factors such as production costs, infrastructure, regulation and private-sector demand.

For the Government, the immediate focus is on creating conditions where promising projects can move forward and investors have greater confidence about the rules they will operate under. The $30 million allocation provides financial backing for that effort while giving regional hydrogen proposals a dedicated pathway to seek support.