Fonterra to cut fossil gas use by 38% with North Island boiler conversions

The conversions from gas to electricity are planned for Edgecumbe and Fonterra's Whareroa site in Taranaki. Photo / RNZ, Cole Eastham-Farrelly

By Eloise Gibson of RNZ

Fonterra has announced that it is converting two of its North Island gas boilers to electricity, lowering its total fossil gas use by about 38%.

Until now, the dairy giant’s focus has been converting coal boilers to wood pellets or electricity.

While not as responsible for heating the planet as coal, gas is also a major fossil fuel.

The conversions are at Edgecumbe and Fonterra’s Whareroa site in Taranaki, with most of the emissions reductions coming from the conversion of Whareroa.

That site alone uses half of the co-operative’s gas and will be electrified in stages.

The first stage of the project will reduce Fonterra’s gas consumption by 25%, with the full conversions of the sites expected to take several years.

The co-op said it planned to get out of gas anyway, but the country’s rapidly depleting gas fields sped up its electrification plans.

“It was certainly topical,” Chris Kane, Fonterra’s engineering, technical and sustainability head, said.

“We’ve got a long-term contract, so we were okay, but we keep a watching eye on it and I think it surprised us a little bit how quickly the gas was depleting, and as you’ll appreciate, we’re highly reliant on gas in the North Island.

“While gas isn’t as big an emitter as coal, it’s certainly an important fuel for us,” he said.

“We’d always planned to move away from gas, so if anything, this just probably accelerated some of those plans.”

This is its first major conversion of a gas plant since it announced plans to cut emissions.

Kane said transmission and distribution of electricity remained a challenge for the co-op’s plans, while growing the generation of renewable electricity was less of a problem.

The dairy giant has now ditched coal at all its North Island milk processing plants and is expected to be largely coal-free in the South Island by the early 2030s - if decarbonisation efforts keep up their pace.

Pressure exerted by customers

The major source of planet-heating gases from dairy is cows burping methane, which Fonterra has promised to reduce by 30% by 2030. Photo / Duncan Brown

The co-operative has been under pressure from global customers such as Mars and Danone to help meet their own emissions reduction goals.

Raw ingredients, including those from Fonterra, make up the bulk of the climate footprints of those multinational food producers.

The major source of planet-heating gases from dairy is cows burping methane, which the dairy exporter has promised to reduce by 30% by 2030, on a per kilo of product basis.

When it comes to the company’s direct operations, the biggest source of direct (not farm) emissions is its milk-drying boilers, which produce powder for export and ingredients.

In December, Fonterra announced its biggest boiler conversion to date — the $64 million switch-over of two coal boilers at its Clandeboye site in South Canterbury to wood pellets.

The Government co-funded the Clandeboye conversion under a Labour-era scheme that has been scrapped by the coalition Government.

The co-op said that investment alone was the equivalent of taking over 100,000 cars off the road.

In all, Fonterra has allocated $790m to lowering emissions.

Kane said by the end of end 2027 it will have spent $600m of that.

Coal goal

Fonterra - which is New Zealand’s single biggest emitter - has vowed to stop using coal by 2037.

Kane said it was on track to have the majority of coal gone by the early 2030s.

“I’d say the majority of the conversions will be done by the early 2030s apart from maybe a few sites, but that’s subject to change.”

He added: “2037 is the cessation date [for coal] but I’d like to think we’re done before that”.

By the end of 2027, Kane said direct (excluding farm) emissions would be down by 33%, the equivalent of having nine boiler sites completely carbon neutral.

Most of the large boiler sites were being converted in stages.

He said the Darfield coal boilers would be the last to convert, given they were the newest.

“People always say, ‘Why can’t you go quicker?’, and the answer is, we are going at breakneck speed.

“We’re extremely happy with where we’re going ... but it is challenging.”

- RNZ