Wood, not electricity: Fonterra

AUCKLAND: Fonterra favours wood over electricity for reducing emissions from its South Island plants.

The country’s biggest dairy processor said using electricity to convert its South Island plants from coal was technically challenging and would cost ‘‘well over $200’’ for every tonne of carbon saved.

Fuel switching was the most effective thing the company could do to reduce its emissions, its sustainable energy and utility manager Linda Thompson said.

While there has been much discussion about the potential for firms to use surplus power when the Tiwai Point aluminium smelter closes, Ms Thompson said its focus was more on wood, which it has used at its Brightwater plant near Nelson and is installing at Te Awamutu.

Even without the cost of getting power to a site, she said converting an existing plant to incorporate new technology was not easy.

Electricity was not a ‘‘silver bullet’’ and came with ‘‘significant engineering challenges’’. Wood biomass was less complex.

‘‘That is the direction we are headed in,’’ Ms Thompson told delegates at the electricity industry’s Downstream Summit in Wellington this week.

Fonterra accounts for about 20% of the country’s carbon emissions. About 89% of that is generated onfarm, and about 10% from the company’s manufacturing plants.

Most of the latter comes from the company’s coalfuelled sites: three in the North Island and seven in the South Island.

The Government last month announced $70 million for transmission upgrades and connection costs to help industrial coal users in the lower South Island to shift to electricity.

But Ms Thompson said that even with lower power prices and low or no transmission costs, the South Island electrification projects still needed a carbon price of about $100 a tonne to be economic. With no assistance, the average cost of carbon abatement across its South Island sites was ‘‘well over $200’’ a tonne.

The auction scheme being introduced to the emissions trading scheme is intended to cap prices at about $50 a tonne.

Ms Thompson said Fonterra was seeking a 30% reduction in emissions from its processing operations, relative to 2018 levels, by 2030.

It had only nine winters of shutdowns left to do upgrades aimed at delivering that target for more than 100 boilers and air heaters across 30 sites, she said. — BusinessDesk