French food group Danone said it would spend $40 million on upgrading its Balclutha milk powder facility to make it carbon neutral.

Danone said the upgrade would make the Balclutha facility the New Zealand dairy industry's first carbon neutral plant.

The company said it it would spend $30 million on building a state of the art biomass boiler, to be fuelled by woodwaste from surrounding plantation forests.

Danone said its new boiler would reduce the plant's carbon dioxide emissions by 20,000 tonnes a year. The existing boiler runs on LPG.

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The Balclutha plant processes raw milk sourced from 18 local

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