Energy Minister Gerry Brownlee has announced a grants scheme to boost biodiesel production in New Zealand.
The Budget on 28 May will allocate $36 million in grants to local producers over three years.
The grants will be available to local biodiesel producers selling to New Zealand consumers.
Mr Brownlee describes the grants as a kick-start for the biodiesel industry, with the benefit of providing jobs as well as reducing greenhouse gas emissions.
He says the scheme fulfills National's pre-election promise of providing incentives for biodiesel producers.
Last year, the Government repealed legislation that would have required a small proportion of petrol and diesel to be sourced from biofuels.
The Labour Party says any support for the industry is welcome, but believes the Government is taking the wrong approach.
Energy spokesperson Charles Chauvel says the grants would not have been necessary if the Government had kept the repealed legislation in place.
Mr Chauvel says that would have provided much more support to the biofuels industry.