Government announces emissions reduction partnership with New Zealand Steel

This partnership agreement is with EECA (Energy Efficiency and Conservation Authority), with support from the Ministry for the Environment, and the Ministry of Business, Innovation and Employment.

The conditional deal with NZ Steel will be part funded up to $140 million from the $650 million Government Investment in Decarbonising Industry (GIDI) Fund, which enables partnerships with industry to reduce their emissions. The rest will be funded directly by NZ Steel.

The deal will eliminate 1% of the country’s total annual emissions and reduce 800,000 tonnes of carbon per year. This is equivalent to taking approximately 300,000 cars off the road.

It is also estimated to contribute 5.3% of the emissions reductions needed under New Zealand’s second emissions budget (2026 to 2030), and 3.4% within the third emissions budget (2031 to 2035).

The installation of an electric arc furnace will replace the existing steelmaking furnace and 2 of the 4 coal-fuelled kilns. This means that NZ Steel will cut its emissions by more than 45%, and will produce 100% of its annual steel production as lower carbon steel.

This project reduces more emissions on its own than all the other 66 GIDI projects that have been approved to date. The deal is the first in a number of bespoke opportunities that the Government is exploring, through the expanded GIDI Fund, to deliberately target appropriate support for New Zealand’s largest emitters.

The supply of electricity required for the new furnace will also include a demand response arrangement in partnership with Contact Energy – where NZ Steel can scale down power supply from the electricity grid when needed to secure electricity supply in the region at peak times.

Details will be completed over the coming months, including various assurances on critical parts of the new operation, to make sure the proposal can be given the full green light and the agreement can become unconditional.

Read the Minister’s press release:

NZ’s biggest ever emissions reduction project unveiled(external link) — Beehive.govt.nz