Government may help Fonterra move from coal

Fonterra could receive help from the Government’s $100 million Green Investment Fund to remove coal boilers from its manufacturing plants, Climate Change Minister James Shaw says.

The heat is on Fonterra to move away from coal because of growing concerns about climate change.

Shaw said he understood Fonterra had a ‘‘fairly significant investment programme’’ that would see some of its existing manufacturing plants switch to liquid biofuels, electricity and woodchip-powered boilers.

But the Government was talking to Fonterra about how it could help the company accelerate the replacement of coal with renewable energy sources, he said.

‘‘They are a commercial operation. We have to tread carefully and respectfully around that, but there may be things we can do.

‘‘We set up the Green Investment Fund for precisely this kind of reason, to come up with creative solutions to particularly difficult financing problems – that is why that is there.’’

The Green Investment Fund was announced by Shaw and Prime Minister Jacinda Ardern in December with the goal of ‘‘investing with business to Climate Change Minister

reduce emissions while making a profit’’.

Replacing Fonterra’s coal boilers was ‘‘a significant capital challenge’’, Shaw said, but he believed it was doable.

The Government’s preference was not to subsidise industry, but there were a variety of ways it could potentially help the dairy giant, he said.

Officials at the Ministry of Business, Innovation and Employment (MBIE) estimate about 8 per cent of the country’s greenhouse gas emissions are generated by ‘‘process heat’’ in industry and, within that, Fonterra’s milk plants are one of the largest contributors.

Fonterra tweaked its policy on coal boilers this month, saying it would not install any new coal boilers at its plants from now on, bringing forward its commitment not to do so from 2030.

But Shaw said he did not think Fonterra would or should stop there. ‘‘Merely capping your emissions at today’s level isn’t going to work.’’

Fonterra’s chief operating officer of global operations, Robert Spurway, said getting out of coal was not as easy as ‘‘just flicking a switch’’ but said it was up for the challenge.

‘‘We are currently investigating options to move out of coal and are open to partnerships with government or other parties to achieve net zero carbon emissions by 2050,’’ he said.

‘‘We have partnered with the Ministry for the Environment to develop a road map to a low emissions future and our recent announcement not to install any new coal boilers or increase coal capacity are part of the work we’re doing to transition away from coal.’’

Fonterra would like to replace coal immediately but that was not feasible, he said.

‘‘A staggered site-by-site approach, is prudent as we juggle significant considerations. We need to ascertain what is the best replacement for each site and then manage the transition while remaining competitive internationally so as not to adversely affect exports and the country’s economy.’’

‘‘They are a commercial operation. We have to tread carefully and respectfully around that, but there may be things we can do.’’

James Shaw