NZ Unveils Wood Energy Strategy and Biogas Plan to Boost Clean Energy Future

At the core of the strategy is a plan to scale up the use of wood energy, derived from forestry and manufacturing residues, to fuel industrial heat and electricity generation.

In a major push to diversify New Zealand’s energy supply and decarbonise industrial heat, the Government has released two pivotal documents: New Zealand’s first Wood Energy Strategy and Action Plan and a Government Statement on Biogas. Together, they signal a renewed focus on the nation’s bioenergy sector as a cornerstone of long-term energy security and climate resilience.

The announcements, led by Energy and Resources Minister Simeon Watts and developed in collaboration with Forestry Minister Todd McClay, underscore the Government’s vision of accelerating renewable alternatives like wood energy and biogas to reduce dependence on fossil fuels.

Wood Energy: A New Strategic Pillar

At the core of the strategy is a plan to scale up the use of wood energy, derived from forestry and manufacturing residues, to fuel industrial heat and electricity generation. This form of bioenergy offers a low-emissions substitute for coal and natural gas, especially for industries that require high-temperature process heat.

“Wood energy could replace around 40 percent of fossil-fuelled process heat by 2050 and displace 300,000 tonnes of coal at Huntly alone,” said Minister Watts. “This would reduce our energy system’s reliance on imported fuels and domestic gas while significantly cutting emissions.”

Beyond emissions reductions, wood energy offers economic and employment benefits, particularly in the regions. If demand reaches 40 Petajoules per year, the Government estimates it could support 20 new wood pellet mills employing over 300 people.

The Wood Energy Strategy outlines six key objectives focused on:

• Strengthening wood energy supply chains

• Stimulating industrial demand

• Promoting investment in infrastructure

• Enhancing data and market intelligence

• Aligning with emissions targets

• Supporting regional growth

$9 Million in Funding to Kickstart the Sector

To jumpstart implementation, the Energy Efficiency and Conservation Authority (EECA) will open a Request for Proposals (RFP) tomorrow for $3 million in co-funding to support wood energy aggregation facilities. These facilities will play a critical role in consolidating and distributing wood fuel more efficiently across the country.

In addition, the Government is committing $6 million in repayable grants to support the establishment of wood energy manufacturing facilities, such as pellet production plants or woodchip processing operations.

Watts encouraged businesses and regional operators to apply for funding, noting that the Government’s support is designed to attract private investment and innovation in the growing bioenergy industry.

Biogas: A New Frontier for Clean Local Energy

Alongside the wood energy strategy, the Government released its first-ever Government Statement on Biogas. This document reaffirms Wellington’s commitment to developing a viable, competitive biogas market and addresses long-standing industry concerns about regulatory uncertainty.

“Biogas has the potential to be a clean, local energy solution to support our transition away from fossil fuels,” Watts said. “But the industry has been clear — they need clarity and confidence from the Government in order to invest.”

The statement outlines actions the Government will take to:

• Improve regulatory settings to reduce investment barriers

• Create consistent market signals for biogas developers

• Promote integration of biogas into industrial, agricultural, and waste systems

• Leverage Government energy demand to drive early project viability

Biogas — typically produced from organic waste, wastewater, and agricultural residues — can be used for heat, electricity, or upgraded to biomethane and injected into the gas grid. It offers a circular economy solution with climate, waste management, and energy benefits.

Tapping Government Demand to Grow Bioenergy

The announcements align with broader efforts to restructure New Zealand’s energy landscape, including recent findings from the Electricity Market Performance Review. The Government has announced a Request for Information (RFI) to identify wood energy and biogas projects that could meet future public sector energy demand, helping de-risk early projects through long-term offtake commitments.

This is part of a broader strategy to use the Government’s purchasing power to catalyse market development in clean energy technologies.

A Vision for Cleaner, More Resilient Energy

Minister Watts described the twin strategies as examples of how energy innovation can deliver economic, environmental, and social benefits simultaneously.

“Both the Wood Energy Strategy and Action Plan and the Government Statement on Biogas are great examples of how energy innovation can grow the New Zealand economy, create jobs, strengthen energy security, and help us achieve our climate goals,” he said.

The initiatives represent a step-change in how New Zealand approaches energy transition — not just through large-scale wind or solar farms, but by leveraging local resources and enabling regional participation in the clean energy economy.

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As New Zealand strives to meet its Net Zero 2050 targets, these strategies provide a roadmap for unlocking the potential of bioenergy, creating a more resilient and diversified energy system for generations to come.