Judith Collins says ending oil and gas exploration is the "worst thing" the Government could have done to combat climate change.
Prime Minister Jacinda Ardern and Energy Minister Dr Megan Woods announced no more exploration permits would be issued, with a small exemption for onshore parts of Taranaki.
Existing exploration permits are still valid. Some last until the 2040s, so it's likely oil and gas will be extracted for decades yet.
This is the worst thing you can do in terms of carbon emissions.
"No current jobs will be affected by the announcement," Labour MP Phil Twyford told The AM Show.
"We have 27 fields that are in current production around the country, 100,000km of sea - an area equivalent to the North Island - currently [undergoing] exploration."
But the decision has outraged the Opposition. National has promised to reverse the decision, saying it will not only "throw away" 10,000 jobs, but accelerate New Zealand's growing rate of carbon emissions.
"This is the worst thing you can do in terms of carbon emissions," Ms Collins told The AM Show.
"Natural gas is a very clean-burning fuel and currently fuels about 16 percent of our electricity supply, plus many homes and many businesses all around particularly the North Island."
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She said electricity generators would be forced to turn to dirty coal to meet energy demand.
According to the US Energy Information Administration, burning natural gas releases about 40 percent less carbon than coal and 25 percent less than gasoline. But drilling for it can release methane, which is around 30 times worse than carbon dioxide when it comes to warming the atmosphere.
At current usage rates New Zealand has enough natural gas to last 11 years, according to the Ministry of Business, Innovation and Employment. But this could change as new fields are discovered and the total held in known fields is recalculated.
If it begins to run out prices are expected to rise, slowing the rate of use and perhaps encouraging consumers and industry to switch to other sources of energy.
Ms Collins accused Labour of lying about its intentions ahead of last year's General Election, suggesting Ms Ardern only made the announcement this week to impress other world leaders at the upcoming Commonwealth Heads of Government Meeting in London.
"They have totally misled the New Zealand public, plus the oil and gas industry. The oil and gas industry's consultation was the night before they made the announcement. That is their consultation. No consultation."
Mr Twyford didn't deny there was little to no consultation with the oil and gas industry, but said the decision shouldn't have come as a surprise to anyone.
"Unless you're a climate change denier, then you must accept that the time has come to take action."
He accused Ms Collins of "lying and scaremongering" about how many jobs would be lost, insisting none would, but wouldn't commit to resigning if there were redundancies.
"Do they believe it's time for a transition to clean energy? If they do believe we have to change, when are they going to make the transition?"
Ms Collins responded by saying National leader Simon Bridges "knows his facts, and he knows this is an appalling decision".
New Zealand's net emissions peaked in 2007 ahead of the global financial crisis, according to Statistics NZ. They fell dramatically in 2008, but have been rising ever since. Transport is the biggest contributor.
Scientists say emissions must reduce enough to keep global temperatures to within 2degC of pre-industrial levels to avoid the worst effects of climate change, which include stronger, more frequent storms, droughts and sea level rises.
Watch the full interview with Judith Collins and Phil Twyford above.
The AM Show with Duncan Garner, Amanda Gillies and Mark Richardson, weekdays 6-9am on RadioLIVE and streaming live to the rova app on Android and iPhone.