Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Electricity key to Fonterra's 2050 net zero target

Electricity key to Fonterra's 2050 net zero target

By Gavin Evans

Oct. 29 (BusinessDesk) - Electricity is probably Fonterra’s best long-term energy option, but the company says it will need a combination of fuels at its sites as it works toward its 2050 net zero emissions target.

New Zealand’s biggest exporter operates 30 plants nationally and is a major user of gas and coal for its milk powder drying.

It expects to start running its Brightwater plant near Nelson on a mix of coal and wood chip next month. In August it announced plans to convert the boiler fuel at its cheese plant at Stirling – south-east of Balclutha - from coal to electricity.

Global operations chief operating officer Robert Spurway said Fonterra is serious about meeting its 2050 target.

Getting there will involve combinations of fuels and incremental changes as new capacity is added or old plant replaced. The choices available will vary regionally and will need to evolve over time as the cost of renewables come down, he said. Energy efficiency gains also remain key.

In the North Island, where the company has more fuel options, Spurway said the company would probably like to move away from coal sooner rather than later.

But whether that will require gas to play a transition role at those three sites is hard to assess right now.

“If we can jump straight to full renewables without gas – we will,” he said in an interview earlier this month.

“Electricity is probably the most sustainable option for thermal heat over time.”

Electrification of transport and heavy industry, alongside large-scale afforestation, will be key planks of New Zealand’s efforts to meet its 2050 target net-zero emissions, the Productivity Commission reported in August.

But Spurway said electrification of the firm’s biggest sites is not a short-term option. Changing Fonterra’s Edendale plant, north-east of Invercargill, to electricity would have increased the site’s operating costs by about 50 percent and would have required an investment from Fonterra of about $160 million in upgrading the supply to the site.

He said Stirling was selected for the company’s electrode boiler trial because the local OtagoNet grid could absorb it without a major upgrade. The change, now in detailed design work, would also make a meaningful contribution to the firm’s emissions reduction by displacing about 9,700 tonnes of coal annually.

As part of its sustainability target, Fonterra has committed to getting its 2030 emissions 30 percent below a 2015 baseline. The company has also pledged to open no new coal-fired capacity from 2030.

Spurway said energy efficiency would also be a core focus in the next 10 to 15 years, with the installation of more efficient boilers, greater use of heat recovery and more use of industrial-scale heat pumps to reduce the company’s total thermal energy requirements.

Fonterra’s starting point for any plant expansion, he noted, is whether it can be achieved without increasing on-site energy demand.

The installation of new water treatment capacity, a new milk protein concentrate plant, and an anhydrous milk fat plant at Edendale in 2015 had been achieved within the site’s existing energy load.

He noted the firm’s energy reductions since 2003 are equivalent to 43 years’ supply for a city the size of Tauranga.

Spurway said coal remains a fuel of last resort on the South Island, and he would be disappointed if the firm failed to meet its commitment on new boilers.

But he noted that when setting that target, the company had been conscious of its regulatory obligation to take any additional milk volume coming into the market.

Spurway said woody biomass does have a role to play in getting emissions down, but will generally be limited to co-firing.

Dairy farms and dairy factories don’t tend to be where there are a lot of trees, he said. And emission reductions can be quickly eroded – or turn negative - the further biomass has to be trucked.

New Zealand Oil & Gas and its partners in the Barque prospect off the Oamaru coast have talked up the potential for a major offshore gas find to reduce coal use by South Island food processors, or to supply an export methanol industry or displace imported fertiliser.

Spurway said Fonterra would have found South Island gas “fairly interesting” a few years ago as a low-emission alternative to coal.

While he would “never say never,” that option may now simply be too far off – given it may take more than 10 years to develop any such find – and then get the gas to any of Fonterra’s sites.

Fonterra is still assessing what the government’s proposed ban on new offshore exploration may mean for its North Island gas options.

While the ban could reduce gas supplies long-term, Spurway said that volume is more likely to be surrendered by large-scale users that may have other options internationally.

He said Fonterra could invest in gas to reduce its coal use – and emissions - even if gas does not remain in its fuel suite longer term. But that’s why a clear understanding of emissions rules and the broad policy framework around energy is so important, he said.

Whereas the government tends to place a big emphasis on rising carbon costs, Spurway said the company is counting much more on the cost of alternative energy supplies coming down to help meet its emission goals.

Geothermal is another area it thinks about, and not necessarily in terms of direct steam use.

While electricity is not currently 100 percent renewable, it can be distributed around the country.

He said the company is keen to work with energy suppliers and come up with the best strategic options that would meet its requirements for sustainability, viability and security of supply.

And that could include under-writing new renewable generation developments – at the right price.


© Scoop Media

Business Headlines | Sci-Tech Headlines


National: National Backs Businesses With $10k JobStart

National will provide a $10,000 cash payment to businesses that hire additional staff as part of our commitment to keeping New Zealanders in jobs, National Party Leader Todd Muller and Finance spokesperson Paul Goldsmith have announced. Our JobStart ... More>>


DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>


Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>


ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>


Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>


RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>


Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>


Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>


Auckland Airport: Thousands Of Kiwis Travelling For Queen’s Birthday Weekend

Confidence in domestic travel is beginning to steadily ramp up, with thousands of Kiwis travelling within New Zealand for Queen’s Birthday.
Nearly 400 flights will be operating to and from Auckland Airport over the long weekend... More>>


Science Media Centre: Understanding 5G Concerns – Expert Q&A

Recent attacks on cell phone towers have brought concerns over the rollout of 5G technology into sharp relief.
While scientific research has consistently shown that the technology does not adversely affect human health, public concerns about its impact have spread around the world, fueled in part by growing misinformation online. The SMC asked experts to comment... More>>


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>


RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>


Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>


Government: Milestone In Cash Flow Support To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>