State-owned energy generator Genesis Energy is buying a 50 percent stake in CRL Energy, a company researching low-emission coal technologies.
The involvement of Genesis, which runs the coal and gas-fired Huntly power station, meant CRL Energy could advance its coal research programmes to eventual commercial application, CRL chairman Alan Broome said.
Research and development projects included high efficiency coal gasification, carbon capture and storage, and hydrogen manufacture. Burning coal creates greenhouse gas emissions.
Genesis Energy bought the stake from the National Institute of Water and Atmospheric Research (Niwa).
The other 50 percent is owned by the Coal Association of New Zealand, which welcomed Genesis Energy's investment.
"Genesis Energy's decision to invest is recognition of the long term potential for New Zealand's coal resources to provide a sustainable, low-emissions energy source," association executive chairman Chris Baker said.
Coalminer Solid Energy has previously said that New Zealand's 10 billion tonnes of economic coal reserves could last 1000 years at current annual production levels, if environmental constraints can be met.
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