Fonterra, New Zealand's second-biggest coal user, said it would stop installing new coal boilers as of today - 11 years ahead of its previously advised plan.
The dairy co-op said the move was part of a new commitment to reduce its reliance on coal, which is used extensively to take the water out of milk as it gets converted to milk powder.
Fonterra last year said it planned to reach net-zero emissions for its global operations by 2050, with a 30 per cent reduction by 2030 from a 2015 baseline.
It said then that it would stop installing new coal boilers from 2030.
Fonterra has a series of targets, including:
• Reducing water use by 20 per cent across manufacturing sites by 2020.
• A tailored Farm Environment Plan for every Fonterra farmer by 2025.
• 100 per cent recyclable, reusable and compostable packaging by 2025.
• Powering its Stirling site in Otago with electricity rather than coal.
Robert Spurway, Fonterra's chief operating officer for global operations, said Fonterra would not increase its capacity to burn coal.
Spurway said Fonterra planned to step up its efforts to help New Zealand transition to a zero-carbon economy, but he said getting out of coal was "not as easy as flicking a switch" and that it would require a staged approach.
"We're determined to go as fast as we can but there are a number of practical challenges we have to overcome," he said.
As it stands, parts of New Zealand's energy infrastructure were not set up to handle Fonterra's requirements.
"Either there aren't alternatives to coal available or, if there are, they are not at the scale needed," he said.
Spurway said Fonterra's manufacturing operations were on track to meet its targets to reduce emissions by 30 per cent across all its operations by 2030 and achieve net-zero by 2050.
Fonterra has 32 manufacturing sites across the country, of which about 40 per cent of its current processing energy is from coal.
The rest is from natural gas, electricity and wood.
The environmental group Auckland Coal Action - now called Auckland Climate Action - has been a constant critic of Fonterra's coal use and has staged protests outside its Auckland head office and other facilities.
Group spokesman Peter Whitmore said today's move was a step in the right direction.
"It's good that they are taking a step in the right direction but, but given that a boiler has a life expectancy of 30 years it does not go far enough," he told the Herald.
"The Intergovernmental Panel on Climate Change (IPCC) says 50 per cent of coal use has to be gone by 2030 and New Zealand should be doing better than that, not worse," he said.
"We should be aiming to be 100 per cent out of coal by 2030," he said.
The IPCC is a United Nations body.