With the $11 million decarbonisation of Fonterra's Te Awamutu manufacturing site all but complete, new chief operating officer Fraser Whineray says he wants a conversion plan for the next target site in Otago nailed this financial year.
The historic Te Awamutu site has replaced coal with wood pellets to provide its thermal heat for steam and hot water production with commissioning of the new system well under way.
Next up for conversion as Fonterra's transitions to renewable energy and a 2050 zero emissions goal is its Stirling cheese plant.
Whineray says that conversion is probably two years off and the alternative energy options still being explored, but he wants the decision made this financial year.
Wood pellet biomass, sourced from Taupo's geothermal-powered Nature's Flame company, was a good solution for the 131-year-old Te Awamutu site because of its proximity to the epicentre of wood fibre production in New Zealand, but it is not a one-size-fits-all solution, he said.
A site had to be close to a reliable wood processing source and the technology for that special processing to be in place. The biomass is trucked to Te Awamutu from Taupo.
"To get these things to work it's not just a matter of capital cost, it's ongoing operational costs. And if the fuel doesn't turn up reliably, we're crying over spilled milk - literally."
Wood pellets were classed as carbon-neutral energy provided they came from a sustainably planted forest and CO2 emissions returned to the plantation.
"We're looking at a range of options [for Stirling]. It could be electricity, it could be pellets," said the former Mercury Energy chief executive, who has long championed electricity as an alternative energy source.
The Te Awamutu site will consume about 48,000 tonnes of wood pellets a year, to achieve steam temperatures of up to 220C for drying milk, and heating water for pasteurisation and cleaning.
The site will continue to use some natural gas and electricity.
The wood pellets contain no chemical additives to sustain burning, Whineray said. Slightly more expensive than coal per unit of heat, they are made from plantation-based wood fibre residues from local sawmills in the form of sawdust and shavings.
Fonterra received a $200,000 technology assistance grant from the Energy Efficiency Conservation Authority towards the conversion cost, which involved modifying existing boiler infrastructure.
Some fabrication was done in New Zealand, and other parts overseas, the latter's timely delivery in a Covid-19 pandemic providing tense moments in the lead-in to the dairy season's October spring flush.
Fonterra has 33 sites comprising 110 manufacturing plants.
The Te Awamutu conversion will reduce the farmer-owned cooperative's national coal consumption by 9 per cent, saving more than 84,000 tonnes of carbon emissions a year. Fonterra says that's the same as taking 32,000 cars off the road.
Fonterra's interim target is achieving a 30 per cent reduction in emissions by 2030.
The Te Awamutu conversion reduces Fonterra's number of coal-fired sites in the North Island to two. Seven in the South Island still use coal.
The company's annual report last year showed it emits 1.7 million tonnes of carbon dioxide a year.
Fonterra receives free carbon credits under the Emissions Trading Scheme, New Zealand's main tool for reducing greenhouse gas emissions.
But the company said these credits are not eligible for carbon neutral claims.
The Te Awamutu site is the sixth largest producer of dairy ingredients in the country and the main buttermilk producer in the Waikato region.
During peak season, it processes 3m litres of raw milk, more than 1m litres of cream and 750,000 litres of buttermilk a day. Milk powder production is 90,000 tonnes a year - filling enough bags to span the length of New Zealand three times.
The three-plant site employs more than 290 people.