Acting Prime Minister Winston Peters has announced a further $950,000 investment in Taranaki to help develop hydrogen fuel infrastructure.

Taranaki has been given an opportunity to become a leader in hydrogen energy instead of oil and gas.

The Government is funding a Taranaki company to develop a plan for a hydrogen manufacturing and supply network that could eventually see much of the nation's heavy transport fleet running on zero emission hydrogen fuel.

In New Plymouth on Thursday acting Prime Minister Winston Peters announced a $950,000 investment in Hiringa Energy and its partners, which are seeking to develop zero emission hydrogen transport fuel.

The funding will be used by the New Plymouth company to scope the engineering and design of two hydrogen generation facilities, up to four mobile compressed hydrogen storage and distribution containers, and up to three hydrogen refuelling stations.

"Hiringa Energy and its partners should be congratulated for this foundation project. It has the potential to provide further employment and investment opportunities through clean energy technology," Peters said.

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Hiringa chief executive Andrew Clennett said he wanted the initial costings and locations for the project decided by Christmas.

"Hydrogen energy has a lot of promise in heavy transport, in industry and general transport and even export, it's a form of being able to export renewable energy, " Clennett said.

"Hydrogen has benefits - you can refill in five minutes and go up to 800 kilometres and it's light, it's got particular advantages when you get into long distances and commercial vehicles."

Initially, their focus would be on sites like ports, big industrial parks, trucking companies and dairy companies.

"There's some clever things and New Zealand is very well positioned for this, our size means we're big enough to do it and we're small enough to do it."

Regional Economic Development under-secretary Fletcher Tabuteau also announced $600,000 from the Provincial Growth Fund for Venture Taranaki to employ a transitional economy manager

to help diversify the local economy away from its dependence on the oil and gas industry.

The announcements were made a lunch with the region's four-member Mayoral forum and Taranaki iwi leaders. Taranaki's three mayors greeted the announcement with cautious optimism.

New Plymouth District Mayor Neil Holdom said he remained unconvinced "but this is a move in the right direction."

"I think the hydrogen route offers an opportunity to Taranaki's amazing engineering capabilities and infrastructure that will start to pay off in 10 to 15 years' time.

"Nobody's cracked this yet but we have to start somewhere and if anyone can do it, I believe Taranaki's engineering can do it."

South Taranaki District Mayor Ross Dunlop said the three mayors had a very positive meeting with Peters before the announcements.

"We discussed issues around the oil and gas decision and how we can be part of the transition to renewables."

"It is frustrating that they have stopped offshore exploration but good we are looking at other alternatives and using the expertise of our engineering sector to pursue that."

"It's a step in the right direction. It is very clear that this is a transition process not a revolutionary process, and that is reassuring," Stratford District Mayor Neil Volzke said.

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New Plymouth MP and National's Energy and Resources spokesperson Jonathan Young said he welcomed the investment.

"It's good to see this initiative supported with a pilot potentially equipping heavy transport vehicles with hydrogen fuel-cell technology.

"Hydrogen can partner with electric motors and enable zero emissions haulage over long distances without 20n per cent of the laden weight of a truck and trailer unit being taken up by very heavy and expensive batteries. "