Government to partner with Fonterra to cut coal use in dairy
The Government has announced it will partner with Fonterra in an attempt to cut coal use in the dairy industry, and reduce agricultural emissions.
The relationship will see the dairy giant commit to cutting coal usage across six of its manufacturing sites which it says will result in 2.1 million tonnes of early C02e reductions. This equates to taking 120,000 cars off the road.
The changes are expected to deliver 2.69% of all New Zealand’s required emission reductions between 2026-2030.
Under the partnership, Fonterra will undertake an emissions reduction programme across its business, focussing especially on the remaining coal sites it uses to process dairy.
The Government says it will co-fund up to $90 million from the Government Investment in Decarbonising Industry (GIDI) Fund, which is paid for through the Emissions Trading Scheme.
Fonterra says it has $790m in investment planned to meet the revised decarbonisation target and is anticipating a combination of energy efficiency, biomass, existing heat pump technology and newer innovative solutions will deliver the reductions.
Prime Minister Chris Hipkins says partnering with Fonterra means the New Zealand dairy sector will cut its coal use quicker.
“This investment enables Fonterra to accelerate their emissions reductions, with an expected halving of their coal use by 2030, and delivers a big chunk of New Zealand’s overall pollution cuts,” Hipkins said.
Fonterra is the country’s largest exporter with 27 manufacturing sites spread across the country. The co-operative has committed to end coal use for industrial heat by 2037 as part of its ambition to be net zero by 2050.
Its plan had been to cut 30% of the emissions from activities where it has operational control by 2030, but it’s now aiming for a 50% reduction by then, from a 2018 baseline.
To achieve the new target, Fonterra would continue improving energy efficiency and switching to renewable energy across its milk collection fleet and manufacturing sites, Chief executive Miles Hurrel said.
The co-operative had carried out decarbonisation projects at five sites over the past five years, and was assessing biomass, electrification and heat pump technology for its Clandeboye and Edendale sites.
Fonterra is also talking to its farmer suppliers about a target for farm emissions, with an estimated 91% of Fonterra’s emissions behind the farm gate.
The partnership comes just months after the Government signed a deal with NZ steel to cut emissions, with the Fonterra partnership the second-largest in magnitude in terms of the target emissions reductions.
Hipkins says it is important to work with industry to achieve their emissions reductions goals.
“The Government is getting runs on the board with our Emissions Reduction Plan. These partnerships with big emitters are reducing pollution, helping build momentum and ensuring we are keeping up with our international competitors.”
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“NZ’s biggest ever emissions reduction project” will eliminate 1% of the country’s annual emissions, equivalent to taking all the cars in Christchurch off the road.
“It demonstrates our Government’s commitment to climate action now, and how much further and faster we can go if we make investments sooner, rather than later,” Hipkins said.
Climate change minister James Shaw says the deal is momentous for the dairying sector.
“This is a decarbonisation deal of national significance. It is expected to deliver over seven percent of the targeted cuts to pollution from the energy and industrial sectors, in our second emissions budget, and over four per cent of our third emissions budget,” Shaw said.
“I congratulate Fonterra, one of New Zealand’s largest emitters, for showing what can be done, what must be done.”