Coal-fired boilers used by heavy industry will soon be a thing of the past.
The government has announced a ban new low and medium temperature boilers from the end of this year and plans on phasing out existing ones by 2037.
An option proposed is to also prohibit other new fossil fuel boilers where suitable alternative technology exists and it is economically viable, the government said.
It was the first step taken in response to recommendations from the Climate Commission, and would reduce carbon emissions within the first three years equivalent to removing 49,000 cars from the roads.
"Today's announcements will make a real difference to New Zealand's emissions profile, and are a significant boost to our clean energy sector, helping us on our path to a cleaner, smarter economy," Minister of Energy and Resources Megan Woods said.
Those wanting to transition to using lower carbon fuels such as biomass, including wood, could apply through the government's decarbonisation fund.
Started last year, it made available $70 million over three years.
"The decarbonisation fund provides crucial financial support to business and industry to help them switch from boilers run on coal and gas to cleaner electricity and biomass options. This helps create jobs in the clean energy sector, and future-proofs our economy," Woods said.
Coal used in industrial boilers was the second largest producer of carbon after transport.