Fonterra has announced plans to phase out coal use at its Stirling cheese plant in Otago.
Stirling will be coal free and using wood biomass to fire the site by August next year.
Fonterra said by switching to wood biomass, the site's annual emissions would reduce by 18,500 tonnes of carbon dioxide – the equivalent of taking more than 7,000 cars off the road.
It was another huge decarbonisation milestone for the co-op, Fonterra General Manager Operations Lower South Island, Richard Gray said.
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"As well as the site being coal free there are additional environmental benefits the new boiler will bring, including reduction in wastewater, noise, solid waste to landfill and air discharge emissions."
There were also economic benefits for the community, Gray said.
"The installation will contribute more than $10 million into the region, along with supporting an estimated 10 jobs in the wood biomass industry."
Stirling was the third significant fuel switching project the co-op had undertaken in as many years.
Fonterra had converted its Te Awamutu site to wood pellets, which had resulted in a 10 per cent reduction in the co-op's coal use. Meanwhile, its Brightwater site at the top of the South Island was co-firing wood biomass.
Fonterra said these three projects, when combined with other energy efficiency work, would reduce emissions by 135,000 tonnes - the equivalent of taking close to 52,000 cars off the road.
With this latest announcement, eight out of Fonterra's 29 sites remained to be removed from using coal.