Z Energy will spend $1.5 million this year in forestry projects to voluntarily offset the emissions from its fuel delivery operations.

The company says it represents the largest voluntary purchase of units from permanent forest sinks seen in New Zealand to date.

Z's sustainability manager, Gerri Ward, said her company had committed to reducing operational carbon emissions by 30 per cent by 2020, and offsetting those it was unable to avoid.

The offset scheme covers the impact of transporting Z fuel around the country by road and sea, corporate travel and electricity. It does not cover the cost of offsetting emissions from the fuel it sells which she said was estimated at $70m.

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Ward said the company didn't want to overstate its green credentials.

Z has partnered with long-standing carbon consultants Permanent Forests NZ (PFNZ), which specialise in aggregating, marketing and selling New Zealand forest carbon credits on behalf of owners of forests registered under the Permanent Forest Sink Initiative.

"The integrity of our offsets is absolutely paramount. By locking up the carbon in these
long-lived forestry projects, we know we're getting authentic outcomes which we can
stand by," she said.

PFNZ's managing director, Ollie Belton, said many possible participants in the
voluntary carbon market were deterred by its complexity, the lack of links between the compliance and voluntary markets, and the shortage of available permanent carbon offsets.

"This deal with Z will undoubtedly make others sit up and take notice, and will lead to more land being committed to long-term carbon conservation," he said.

Z's operational carbon emissions, including those from corporate travel, retail electricity,
coastal emissions, and hauliers come to about 58,000 tonnes of CO2-e (carbon dioxide
equivalent) per annum. At an average cost of about $25 per tonne, this comes to an annual cost of about $1.5m a year.

Alongside the offset programme, Z also continues to focus on reducing the carbon
intensity of its business. Z's biodiesel plant in Wiri is operational - although not producing in commercial quantities, and the company had increased its investment in Wellington-based electric ridesharing company, Mevo.