Dairy giant Fonterra is planning to invest three-quarters of a billion dollars, including $90 million from the Government Investment in Decarbonising Industry (GIDI) fund to increase its decarbonisation ambitions.
Fonterra boss Miles Hurrell says it is lifting its target reduction to 50% of 2018 levels from the previous target of 30% by 2030.
“Fonterra’s Scope 1&2 emissions largely come from our manufacturing operations and supply chain. Strengthening our emissions reduction target supports our ambition to be net zero by 2050,” Hurrell says.
Achieving the new target will require Fonterra to continue to undertake energy efficiency improvements and fuel switching to renewable energy source activities across its milk collection fleet and manufacturing sites, with a focus on the six where it uses coal.
Prime Minister Chris Hipkins, who was scheduled to join the announcement at Fonterra’s Hautapu plant before the Auckland CBD shooting kept him Wellington, says the ambitious investment means the dairy sector will dramatically reduce its coal use, which is critical for both the environment and the country’s economy.
“By partnering with Fonterra to reduce emissions we’re helping to maintain New Zealand dairy’s competitive edge, as international consumers and food manufacturers demand further climate commitments.
“In my recent trade missions, I’ve heard first-hand the importance of New Zealand’s climate credentials to our exports. This partnership is an investment in our future economic prosperity.
The investments will see Fonterra phase out coal boilers at six of Fonterra’s sites across the country, almost all in the South Island. The project will achieve 2.69 per cent of the total reductions between 2026-2030.
However, Greenpeace Aotearoa campaigner, Christine Rose says while the investment is welcomed, subsidising Fonterra’s move away from coal is “far too little”.
“It’s good to see the government finally doing something to address ‘Big Dairy’s’ colossal climate pollution and the climate movement can be proud of that but we need much more. Without regulation to reduce cow numbers and synthetic nitrogen fertiliser usage, taking the coal out of milk dehydration is just a drop in the bucket.
Rose also questions the need for government contributions towards decarbonising Fonterra, which reported an after-tax of $1.2b for the final quarter of the last financial year.
“Fonterra is absolutely creaming it while the rest of us pay the price for dairy pollution, and they continue to get a free pass on the vast majority of their emissions. As New Zealand’s largest exporter, Fonterra can and should pay for its own emissions reduction,” Rose says.
“Most of Fonterra’s emissions come from cows, not coal. These emissions are superheating methane and nitrous oxide gases, and are driving extreme weather events like Cyclone Gabrielle, from which New Zealanders are still not recovered.”
Climate Change Minister James Shaw described the deal as momentous for the sector.
“This is a decarbonisation deal of national significance. It is expected to deliver over seven per cent of the targeted cuts to pollution from the energy and industrial sectors, in our second emissions budget, and over four per cent of our third emissions budget.
“With a programme spanning multiple Fonterra sites, this will put New Zealand in a better position to reach net zero by 2050. But we cannot be complacent. We have to do everything we can to radically reduce our reliance on fossil fuels to avoid the worst of climate crisis,” Shaw said.
Hurrell says the project will also see the dairy co-op explore multiple technologies to maximise the efficient transition to renewable energy sources.
“Over the past five years, we have carried out decarbonisation projects at five different sites and we’re looking forward to continuing this momentum.
“Accelerating our plans will help Fonterra continue to present our customers with the world’s lowest carbon dairy at scale. It will also contribute to New Zealand meeting its climate targets while delivering benefits across regional New Zealand, such as job opportunities in local communities,”
