Kawerau plant: Plans to build $300m, fossil-free fuel plant employing 100

Foresta says it plans to invest $300 million building the plant which at full production will employ more than 100 workers. Photo / NZME

Plans to build New Zealand’s first plant to produce low emissions fossil-free fuel to replace coal have moved a step closer with the signing of an agreement to lease a site at Kawerau.

Australian-listed company Foresta has announced the signing of a 30-year lease, with a 20-year right of renewal, on a 9.6 hectare property in Kawerau with Putauaki Trust.

In a statement, Foresta said it planned to invest $300 million building the plant which, at full production, would employ more than 100 people.

“There’s a huge opportunity in New Zealand for our world-leading low emissions technology and today we’ve taken a major step forward in our plans,” Foresta chairman Henry Cheng said.

He said it would produce “unique low-impact torrefied wood pellets”.

The site chosen for the plant is in an industrial zone developed by Putauaki Trust with Provincial Growth Fund support, the statement said.

Foresta was negotiating supply agreements with owners of sustainably managed pine plantations. In December Foresta signed a 10-year agreement with South Island energy distribution company Tailored Energy & Resources Ltd (TERL) to supply 65,000 tonnes of pellets annually to its industrial customers.

TERL is an energy distribution company supplying solid fuels, mainly coal and wood pellets, for raw resource processing such as milk, meat and wool as well as energy supply for industrial heating of schools, hospitals and horticulture.

The production process produces torrefied “black” wood pellets heated to between 200C and 300C in the absence of oxygen.

Foresta said black wood pellets had the potential to significantly reduce carbon emissions when used as a drop-in replacement for coal, as well as to reduce emissions from shipping for every log not being exported. A recent Genesis trial at Huntly power station using similar pellets reduced emissions by at least 90 per cent, Foresta’s statement said.

“With the phasing out of industrial coal boilers by 2037, Foresta is uniquely placed to provide locally produced black wood pellets which are a seamless drop-in replacement for coal as a fuel source in boilers without any loss of energy intensity,” Cheng said.

New Zealand consumed around 2 million tonnes of coal per year for industrial processes, electricity generation and commercial heating. Just 7 million tonnes of pine feedstock would be used to produce 2 million tonnes of black wood pellets, which could directly replace the country’s annual coal consumption.

“The fuel could potentially reduce New Zealand’s total annual gross greenhouse gas emissions by 5 per cent while adding 20 per cent value to the country’s forest revenues.”

It uses the stumps and tops of trees and would could help mitigate the industry’s slash issue, Cheng said.

The planned plant will also produce natural, pine-based chemicals (rosins and terpenes) from pine trees which can replace petroleum-sourced chemicals. These are used in everyday items including flavours, fragrances, chewing gum, paint, ink and tyres.