An Auckland tourism business has switched its marine fleet to biofuel, pioneering New Zealand's first commercial biofuel supply agreement.

Explore NZ has signed a $3 million deal with Environ Fuels Ltd which will supply B20 fuel (20% biodiesel blend with mineral diesel), blended especially for its 12-boat fleet. The mix was chosen after "extensive" testing.

Environ Fuels NZ director Toby Littin said the agreement was the first commercial scale bio-fuel deal in New Zealand under the government's biodiesel grants scheme introduced in July.

The grant offers biodiesel producers up to 42.5 cents per litre for biodiesel, or biodiesel content of a blend.

Mr Littin said Explore NZ's carbon emissions would drop by 85%, even taking into account the carbon emissions required for collecting, processing and transporting the biodiesel component of the blend.

Explore NZ's 12-boat marine fleet includes the Pride of Auckland, Auckland Whale and Dolphin Safari, Sail NZ along with Dolphin Discoveries in the Bay of Islands.

Its managing director William Goodfellow said the company had embraced the new technology.

“We want to pitch it as a lead for the tourism industry and to further promote New Zealand’s clean green image - and what’s more, we are buying the fuel from a New Zealand company, it’s a win for all involved.”