Dairy giant Fonterra is looking at every aspect of its supply chain to reduce its gas emissions and have a material impact on climate change, writes Graham Skellern.

Wood biomass is now blended with coal to run the boiler at the Brightwater plant near Nelson.

"We do see emerging technologies around feed regimes and breeding that can make a difference to global emissions."

Robert Spurway, Fonterra's chief operating officer global operations New Zealand's biggest company, Fonterra, has taken its first steps down the long path of converting its coal-fired operating sites and significantly reducing carbon gas emissions.

Robert Spurway, Fonterra's chief operating officer global operations.
Robert Spurway, Fonterra's chief operating officer global operations.

Fonterra, a founding member of the Climate Leaders Coalition, is committed to helping New Zealand achieve its Paris Climate Agreement and has partnered with the Ministry for the Environment to develop a roadmap to a low emissions future.

The global dairy giant has set new environmental targets for both on-site and on-farm emissions.

It is planning to reach net zero emissions for its global operations by 2050, with a 30 per cent reduction by 2030 from a 2015 baseline. It has vowed to stop installing new coal boilers from 2030.

Energy efficiency programmes over the past 15 years has seen Fonterra save enough to power a city the size of Tauranga for 43 years. But there's more.

With funding support from Energy Efficiency and Conservation Authority, Fonterra is converting the existing boiler at its Nelson Brightwater site to burn wood biomass, as well as coal.

In an industry first, the move will cut carbon dioxide emissions from the factory by 25 per cent or 2400 tonnes a year – the equivalent of taking 530 cars off the road.

"We see the conversion as a pilot to test the supply chain for wood biomass," says Robert Spurway, Fonterra's chief operating officer global operations. "One of the challenges is access to wood biomass. Our sites are built in dairy farming areas and not close to forests — though Nelson does have some good access to forestry. But transporting wood biomass becomes a factor."

Fonterra is replacing coal with electricity to power its Stirling site in South Otago, saving up to 10,000 tonnes of emissions each year. "We are excited about this," says Spurway. "I believe the pathway to a fully renewable future by 2050 is electricity – as well as solar and wind power."


He says the learnings from the Stirling project can be replicated across similar sites.
Fonterra has three out of its 17 North Island manufacturing sites burning coal and 11 in the South Island. With no supply of natural gas in the South Island, Fonterra has used coal to ensure the plants can process its high perishable milk.

Fonterra has surrendered its Mangatangi coal mining permit and divested nearly 50 per cent of land bought for coal mining.

Spurway says converting all the coal-fired sites to electricity will take several decades and significant investment. "We have a good track record of energy efficiency programmes — and while co-firing with wood biomass has potential, it doesn't solve the problem.

"Moving to fully renewable electricity is the best option, but there needs to be an increase in generation and upgrades of the network to secure supply and achieve economies of scale," he says.

Fonterra has also signed up with Z Energy to receive biofuel for its milk tankers at several Waikato and Bay of Plenty depots.

The biofuel is blended with diesel and has the potential to reduce emissions from each tanker by 4 per cent in a year.

Of course, Fonterra would like to convert all its 500 tankers, which travel more than 80 million kilometres in New Zealand each year, but like wood biomass and renewable electricity it has to be sure of the long-term supply of biofuel.

"It's unlikely that biofuel will be a full replacement for diesel but every little bit makes a difference," says Spurway. "We are looking at improving efficiency and reducing emissions along every step of the supply chain. From using the more efficient large container ships to changing to electric forklifts in our operating sites and warehouses."

Fonterra followed up an employee's innovative idea and is recycling water at its Pahiatua site, saving half a million litres of water a day, the equivalent of 18 tanker loads. New reverse osmosis technology at its Darfield site will reduce the amount of groundwater drawn by 70 per cent.

Learnings from Pahiatua and Darfield will be applied elsewhere to help reach Fonterra's 2020 target of reducing water use by 20 per cent across 26 manufacturing sites in New Zealand Fonterra is turning its attention to reducing on-farm emissions. "The New Zealand dairy model is very efficient and we are proud of that but we need to do more," says Spurway. "We can make the most of our position by investing in breakthrough technologies that produce low-emission animals, and then sharing them with the world.

"We do see emerging technologies around feed regimes and breeding that can make a difference to global emissions. Many of them are quite long research projects and as yet there has been no step change."

Fonterra is positioning itself to develop and commercialise mitigation technologies that have a positive impact on global emissions by 2050.

In its first Sustainability Report, released at the end of last year, Fonterra says: "Our continued success on the world stage is reliant on a clean, sustainable environment and continuous improvement in the production and transportation of our products."

Challenging views

David Cunningham CEO Co-operative Bank

I firmly believe that the plummeting price of solar solutions, especially battery technology, will fundamentally change environmental outcomes. Government support isn't needed either — the mass impact of customer choice and market price signals will fundamentally change the world. The evidence is there — the early runs on the board from the likes of Tesla are now mainstream. Every major car manufacturer is adopting electric technology. Although that is just one "use case" the momentum is gathering. In a decade 20 per cent of New Zealand households will use solar for power.

At Co-op we will not specifically target environmental solutions (though doing what's right is in our DNA); our customers will make the choice and borrow as needs be to fund environmental solutions.

We'll fund within our normal lending parameters.

David Mair CEO Skellerup
Moving toward a carbon neutral economy ignores a number of natural processes that produce carbon dioxide (e.g. volcanic activity etc).

My main concern is the focus on carbon emissions. This gets translated as burning anything, especially fossil fuels, is bad for the planet. The output of oxidising clean natural gas is water and carbon dioxide — plant food (together with sunlight).

We would be much better off focussing on reducing the use of coal by replacing that use with natural gas. Huntley and Fonterra's power plants would be a good place to start.

Speaking as an individual, I do not understand why NZ companies are lining up to look good when the proper debate is not happening.

Genesis energy will need to import coal because of a shortage of gas! Managed properly, we can have a reliable supply of natural gas which is often far better than electricity generated in the South Island. It would be better to convert Huntly completely to natural gas. Not going to happen with the current attitude.

When it comes to global emissions, China and the US represent 40 per cent. Add in India and Russia and you are at 50 per cent. NZ's output is about 0.2 per cent of the global total.

I do not mean to imply we should not minimise emissions and, of course, do what we can to make the world a better place, but changing to electric cars or whatever will not be enough.

In the interim, electricity supply in NZ will become more volatile and there is a serious risk of increasing costs for business that will mean other solutions will be found (moving business offshore).