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NZ Government Considers Electricity Investment Guarantee, Risks Taxpayer Funds

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  Published in Politics and Government on Monday, February 23rd 2026 at 15:21 GMT by The New Zealand Herald
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Wellington, New Zealand - February 23rd, 2026 - The New Zealand government is actively considering a controversial scheme that would effectively insure electricity investors against the risk of future policy shifts away from fossil fuels. The proposal, revealed through documents obtained via the Official Information Act, could potentially expose taxpayers to millions of dollars in liabilities. The move is being pitched as a mechanism to bolster investor confidence in New Zealand's electricity infrastructure, but is drawing sharp criticism from opposition parties and taxpayer advocacy groups.

Energy Minister Simeon Brown confirmed the government is exploring the feasibility of acting as a guarantor for long-term electricity contracts, primarily those tied to fossil fuel-based generation. This would entail the government assuming the financial risk should a subsequent administration enact policies that diminish the profitability of these investments. The stated goal is to encourage much-needed investment in electricity infrastructure and fortify New Zealand's energy security, a concern that has been escalating as demand increases with population growth and the adoption of electric vehicles.

The idea for this guarantee scheme originated within the electricity sector itself. Industry representatives have expressed anxieties about the potential for future governments to reverse current policies that support fossil fuel projects, rendering long-term investments financially unsustainable. A source within the industry, speaking anonymously, explained, "This is about giving investors certainty. The electricity sector operates on long-term contracts, and these contracts are underpinned by assumptions about the policy settings in place. Without that certainty, investment dries up." The industry argues that the inherent risks associated with long-term energy projects require a degree of policy stability to attract capital. They point to international examples where similar guarantees or power purchase agreements have been utilized to de-risk investments in renewable and, increasingly, transitional energy sources.

However, the proposal has ignited a fierce debate regarding the appropriate role of government in mitigating commercial risks. The Taxpayers' Union has vehemently condemned the scheme, labeling it a "recipe for disaster" and warning of a significant "moral hazard." "It incentivises companies to make risky investments with the comforting knowledge that taxpayers will foot the bill if things go wrong," a spokesperson stated. The concern is that such a guarantee would remove the incentive for companies to adequately assess and manage the inherent risks associated with investments in politically sensitive sectors like fossil fuels.

The Green Party has also voiced strong opposition, characterizing the proposal as a misallocation of public funds and a prioritization of corporate profits over the needs of New Zealand citizens. Green MP Julie Anne Genter argued, "This is another example of the Government prioritising the profits of big corporations over the wellbeing of New Zealanders. We should be investing in genuinely sustainable energy solutions, not propping up outdated and environmentally damaging fossil fuel infrastructure." The Green Party advocates for accelerated investment in renewable energy sources such as solar, wind, and geothermal, and believes the government should be actively phasing out fossil fuel reliance, not insuring it.

While the precise financial implications for taxpayers remain unknown, analysts suggest the cost could be substantial, potentially running into the hundreds of millions, or even billions, of dollars depending on the scale of investments covered and the extent of any policy reversals. The lack of a publicly available cost-benefit analysis is fueling criticism and demands for greater transparency.

The debate comes at a critical juncture for New Zealand's energy transition. The country has committed to ambitious climate change targets, including becoming carbon neutral by 2050. Achieving these goals necessitates a significant shift away from fossil fuels, but the current electricity infrastructure relies heavily on gas and, to a lesser extent, coal. Finding a balance between maintaining energy security, attracting investment in new infrastructure, and meeting climate commitments is proving to be a complex challenge.

The government is currently in a consultation phase, engaging with stakeholders from across the energy sector, as well as with opposition parties and advocacy groups. The outcome of these consultations will likely determine whether the scheme proceeds and, if so, what form it ultimately takes. The decision will undoubtedly have far-reaching implications for New Zealand's energy future and the financial burden shouldered by its taxpayers.