A Green Party plan to end industrial coal use by 2030 would be "tough" for many New Zealand industries but is a target that is worth aiming for, Synlait Milk said.
Halting the use of coal in process heat by then would be "pretty ambitious" even for a company like Synlait which doesn't compete in price-sensitive global commodity markets like most of the dairy sector and many other local industries, said Hamish Reid, the company's director of sustainability and brand.
Synlait had been aiming to be off coal at its Dunsandel plant in Canterbury by 2030 or 2032 through a combination of electrification, biomass and other on-site generation, he told BusinessDesk.
But other firms competing on price in global markets would find it hard meeting the target, which the Green Party announced at the weekend as part of its pre-election roll-out.
"We are operating in markets where the margins are higher so we can afford to build those additional costs into our business," Reid said.
"That is not that easy for other companies in our industry and in other industries in the wider economy."
The Greens on Sunday issued a 22-page clean energy plan, which included the ban on industrial coal use by 2030 and a similar ban on gas use from 2035. It would also bring forward the government's much-criticised deadline for 100 per cent renewable generation target by five years to 2030.
Process heat focus
The Greens noted that the coal and gas policy was aimed at reducing emissions from process heat, so was not targeted at steel making, or other applications where gas was used as a feedstock, such as in the production of fertiliser or methanol.
To help firms make the change the party pledged to roughly triple government support for boiler conversions to $110 million annually.
The dairy sector is a major user of coal, particularly on the South Island where there is no piped natural gas supply. Coal has roughly twice the emissions of gas and many firms have stopped using it for new capacity.
Synlait has 55 megawatts of coal-fired plant at Dunsandel and is using gas at its new plant at Pokeno south of Auckland. Early last year it installed a 6-megawatt electrode boiler at Dunsandel and can roughly double that capacity when needed.
Open Country Dairy is currently installing a 13-MW electrode boiler at its Awarua plant south of Invercargill where it also burns coal.
Fonterra, which is replacing coal with wood pellets at its Te Awamutu plant, is also looking at electrification for lower-heat applications at its plants but has signalled the challenge it faces reducing coal use at its large South Island sites.
Last year the firm said that it could fuel a new dryer of the size of its largest coal-fired unit at Darfield with wood, but that would use most of the available supply in Canterbury. Electrode boilers were expensive but could be used to complement wood and help meet peak demands.
Reid said it's inevitable that New Zealand industry moves off fossil fuels, and he said there is really no excuse for firms without high-temperature requirements or for other coal users, such as hospitals and schools.
NZ also has to move away from its unsustainable dependence on commodity-grade products and into higher-value lines where producers aren't competing solely on price.
But Reid thought the Green's proposed 2035 deadline on natural gas use would be a "big stretch". He was also concerned at the party persisting with the 100 per cent renewable generation policy when the Interim Climate Change Committee had shown how "ridiculously expensive" that would make electricity.
Reid said the "billions of dollars" required to get above 96 per cent renewable power generation would be better spent on electrification of transport, or developing hydrogen, as the ICCC had also recommended.
The Petroleum Exploration and Production Association of NZ also highlighted the inconsistency of the Green's persisting with the 100 per cent renewable target, having supported the findings by the ICCC last year.
Association chief executive John Carnegie said rather than "picking winners," the Greens should allow the emissions trading scheme to encourage the most cost-effective way of reducing emissions. That would help ensure energy supplies remained affordable, reliable and sustainable.
"We support alternative fuels, but they have to be economic rather than rely on permanent subsidies," Carnegie said.
"We need natural gas to provide a back-up to renewable electricity, keeping prices down and therefore encouraging electrification. We agree with the ICCC this is a much better way to support decarbonisation."
Other initiatives announced as part of the package include a plan to put solar panels and batteries on state houses and offer grants to meet up to half the cost of putting them on private homes.
No emission benefit was claimed for those initiatives, which would tend to displace other renewable generation and were headlined as "affordable solar systems for all." The scale and cost of those programmes is expected to ramp up to about 30,000 homes and $400m a year over three years.
The Greens also want to stop issuing permits for onshore exploration. The party was instrumental in the government's surprise 2018 ban on new offshore exploration permits.
Carnegie said ending new permits for onshore natural gas production would undermine the country's energy security.
"We think it's better to produce our own energy here in New Zealand, rather than having to import higher-emitting energy from overseas – a lose-lose outcome."