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According to Nikon, the NEF format supports lossy, lossless or no compression (there's a setting in newer cameras). What I have is a terabyte of NEFs from an old camera which are uncompressed. Is there any way to convert them to the lossless NEF format now? Or any other lossless compression method I can use, similar to JPEG XL?

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    Trouble with NEFs is, even though like DNG they're roughly based on TIF, they're entirely proprietary. You can't even do this conversion in Nikon's own software.
    – Tetsujin
    May 3 at 9:09

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I do not thing there is utility to convert between compression schemas (actually different formats) for NEF files. You can test Adobe DNG Converter if the resulting DNG is smaller by size (but I doubt).

The other way is to use some file compression utility like ZIP, RAR, etc to try to make them smaller. But this will add additional step in your workflow (to decompress the RAW files).

As general recommendation: keep them as they are, do not make any changes on them. Any change in RAW file may lead now or in the future of broke something or make them unreadable. Moreover currently the price of storage decrease so add more storage and keep the originals.

About backup you can use Amazon Photos which offer you unlimited space for photos (including RAW files). I currently keep there almost 3TB of data.

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    DNG files actually come out slightly larger than the uncompressed NEFs, unless you set lossy compression [there's no lossless option], in which case they come down to about 1/3 original file size - i.stack.imgur.com/5c8v4.png
    – Tetsujin
    May 3 at 9:08
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    I just keep the RAWs too. I discard my intermediate 16-bit TIFFs [I process first pass in ViewNX-i then send TIF to Photoshop, which I hate for NEFs, CameraRAW is a poor guess on NEFs] then keep the PSDs & any exported end result. The 150MB tiffs I can recreate if I need to from the NEF & sidecar. :)) I've tried DNG to try carry to Ps without needing NX-i, but it was no better, so I gave up with it.
    – Tetsujin
    May 3 at 9:20
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    @kontextify, check my edited answer.
    – Romeo Ninov
    May 3 at 10:43
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    @RomeoNinov thanks, good tip.
    – kontextify
    May 3 at 11:41
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    Actually, DNG is lossless by default and 10% smaller in my case. See my answer.
    – kontextify
    May 4 at 4:29
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I was able to get some results with Adobe DNG Converter, default lossless settings:

enter image description here

I get a 10% file size reduction with my photos, so 20MB uncompressed NEF > 18MB DNG. May not seem like much, but that's already 100GB+ saved in local storage, backup storage and bandwidth.

Note: while pixel data is prerserved 1 to 1, it is possible that some camera metadata will be lost by converting (depending on your camera and Adobe's support for it).

For anyone else on Linux, the tool runs perfectly on Wine.

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