< News
December 9, 2025
| Summary: Decarbonisation in New Zealand’s industrial manufacturing sector is critical but complex, with challenges including aging assets, legacy equipment, limited grid capacity, and regulatory changes. While technologies like electric boilers, heat pumps, and alternative fuels offer low-carbon solutions, each site requires a tailored approach. TEG Projects supports manufacturers as a trusted project delivery partner, combining industrial project management, asset management, and best-practice execution to deliver practical, long-term decarbonisation outcomes. |
Rhys Knauf, Industrial Plant Services Lead at TEG Projects, shares his practical perspective on the real-world challenges of decarbonisation in New Zealand’s industrial manufacturing sector. With over a decade of hands-on experience working in brownfield environments, managing aging assets, and delivering complex projects, Rhys reflects on how decarbonisation goals can be grounded in operational reality and turned into actionable outcomes.
In New Zealand, there is growing pressure on the manufacturing industry to adopt decarbonisation initiatives. According to EECA, process heat accounts for around 30% of New Zealand’s energy-related emissions, with manufacturing being a major contributor, and while initiatives have been well-supported through co-funding schemes, they do not always resolve the biggest roadblocks of decarbonisation and low‑carbon transition. These roadblocks often include internal decisions, impractical advice, and option analysis that ultimately hinder progress towards a more sustainable future – even after companies financially commit to achieving long‑term investments in decarbonisation goals.
A significant reason for this is that no two sites are identical. Factors such as grid connection, availability of alternative fuels, and the age of existing assets mean that each site requires a unique approach to justify improvements to the infrastructure, particularly when managing aging assets and legacy equipment.
Suddenly, it doesn’t sound like a clear, executable project objective, right?
The NZ Industrial Manufacturing Landscape
For years, gas and coal have served as the backbone of industrial energy in New Zealand, offering a standardised, reliable, and cost-effective source of heat and power across a wide range of manufacturing processes. Fuel supplies have been plentiful and provided a cost-effective solution for process heating. The dependability of the fuel and proven technologies made hydrocarbons the default choice for process heat—rarely questioned and deeply embedded in our industry.
That status quo began to shift dramatically after 2018, when the New Zealand Government halted new offshore oil and gas exploration, intending to incentivise electrification and accelerate the transition to renewables. While the long-term consequences were foreseeable, the intervening years saw the Covid-19 pandemic, a lack of new gas field development, and steadily declining gas reserves. By 2025, New Zealand’s gas supply has reached ‘crisis’ levels, with reserves down 27% year-on-year and annual production now forecast to fall below 100 PJ as early as 2026—four years sooner than previously expected.
This has led to rapidly rising gas prices—doubling or more for many industrial users over the past five years—and forced some manufacturers to reduce operations, cut staff, or even consider closure.
While commendable efforts have been made to promote sustainable alternatives, the timing and market readiness were misaligned. The result? A lack of momentum for a meaningful step-change in the carbon footprint of NZ’s manufacturing sector.
This has contributed to a slow adoption of decarbonisation and increasing operational costs for users of natural gas. Technologies and solutions are slowly evolving to meet market demands both in New Zealand, but not fast enough, despite ongoing technology innovation and pressure to support adoption.
Key Decarbonisation Technologies and Their Challenges
There is a vast range of technologies available to electrify industrial process heat requirements. And due to electricity grid limitations, a ‘simple’ like-for-like exchange for electric boilers (Steam Jet, Electrode, Resistive Element) are often not a feasible solution. Alternatively, biofuel technology and fuel supply is still developing, and suitability varies on locality.
Our experience shows practical solutions are often a combination of process optimisation, load shedding, heat recovery and localised process heat sources utilising remote heat pumps and hot water reticulation. Often sites may retain a small reliance on gas fired boilers and limited steam reticulation.
However, there are steps an organisation can take to optimise their readiness for an energy transition:
- Thermal demand on existing steam boilers can be tweaked to improve efficiency
- Process mapping – source reduction of thermal demands throughout factory
- Rationalising thermal loads – last 1% of steam demands often add 20% to total capacity
- Alternative heat sources for non-critical heating needs
- Operational improvements – timing of peak loads, process starts etc. (load shedding)
- Asset management strategies for end of life operation
A summary of technology benefits and challenges is provided below.
Benefits: Zero onsite emissions. Works with renewable electricity.
Challenges: Grid connection delays. High peak demand costs. May need infrastructure upgrades.
Benefits: High efficiency. Good for low-grade heat. Can capture and reuse waste heat.
Challenges: Not always suitable for high-temperature needs. Higher upfront cost.
Depends on understanding process heat mapping (sources and sinks). Market readiness varies by heat type (steam, hot water, pressure, temperature).
Refrigerant choices also have safety rules. Heat transfer methods must protect hygiene and food safety.
Benefits: Smart control of high-energy equipment. Smooths out demand peaks. Can reduce site power needs and ongoing costs. May avoid larger capital upgrades.
Challenges: Needs a good understanding of process demands and where improvements are possible.
This is the current landscape of industrial decarbonisation in 2025, however there is hope that Electricity Authority’s 2025 Reform will streamline grid connection processes for large energy users, providing a feasible transition pathway to renewable energy sources.
Project Implementation
Decarbonisation projects are not simple. They have roadblocks. Site and technology challenges. Evolving suppliers. Complex financial implications. Lack of understanding.
We find there is no cookie-cutter solution for decarbonisation initiatives – highlighting the importance of good stakeholder engagement, thorough FEL project development and well-specified engagements. In addition, complexity is often added by well-established brownfield environments, with structural limitations, complex process and technical challenges.
Our Industrial Plant Services Projects team are specialists in navigating decisions and guiding decisions via a robust process. Our 20yrs of experience in NZ Manufacturing industry leverages best-practice industrial project management with a network of technical specialists and contractors. We work closely with client organisations, support our onsite team with high-level governance, and share key learnings to maximise the value provided as a trusted project delivery partner..
Are you looking for specialists to help you achieve your decarbonisation goals, give me a call or flick me an email now, let’s get a plan in place. Rhys Knauf
FAQs: Decarbonisation in NZ Industrial Manufacturing
1. Why is decarbonisation important for NZ’s industrial manufacturing sector?
Decarbonisation is critical due to rising energy-related emissions, especially from process heat, and increasing regulatory and market pressure to transition to low-carbon alternatives. It also supports long-term sustainability and cost stability as fossil fuel supplies decline.
2. What are the main challenges industrial manufacturers face in decarbonising?
Common challenges include aging assets, legacy equipment, limited grid capacity, uncertain alternative fuel availability, and the complexity of adapting existing infrastructure within brownfield environments.
3. What role does TEG Projects play in decarbonisation initiatives?
TEG Projects acts as a project delivery partner, providing expert industrial project management and asset management to help manufacturers navigate decarbonisation, from early-stage planning to execution, aligned with EECA and regulatory requirements.
4. Which technologies are most effective for reducing industrial carbon emissions?
Effective options include electric boilers, heat pumps, alternative fuels (e.g., biofuels), load shedding systems, and heat recovery solutions. The best mix depends on each site’s technical and operational constraints.
5. How can manufacturers ensure long-term success with decarbonisation?
Success relies on tailored project planning, regulation compliance, strategic investment in infrastructure, and the integration of scalable, future-ready technologies. Partnering with experienced consultants like TEG Projects ensures a practical and sustainable approach.
