Around a third of Fonterra sites use coal, the majority of which are in the South Island where we do not have the option of using natural gas. This is not unique to Fonterra ¬– every dairy factory and most large industrial operations in the South Island are coal-fired due to the lack of viable alternatives.
Jeanette mentions wood burners already in use in the South Island, the largest of which is around 50 times smaller than those needed to run a dryer. While Fonterra is looking at this technology carefully, replicating it at scale is challenging and costly. At a time when our focus is reducing costs and generating better returns for our farmers, investing heavily in retrofitting our operations is not feasible.
We are highly conscious of our environmental impacts and do what we can to reduce and offset them wherever possible. This includes making a significant contribution towards carbon credits under the Emissions Trading Scheme.
Contrary to Jeanette’s claim that the taxpayer pays for 60 per cent of our credits, our emission intensive and trade exposed allocation (two of the criteria against which the scheme assigns carbon credits) is in fact less than 2 per cent of total annual emissions.
We have been clear about our strategy to move into more renewable forms of energy and are making significant improvements in terms of our energy efficiency and emissions as a result. Our research of new technologies will help us to continue to move towards cleaner, more efficient forms of energy.
We recently trialled the use of Miscanthus and have assessed technologies that allow us to co-fire biomass in a number of our newer plants. The latter is included in our consent applications for the potential expansion of our Studholme site, and will be an option should that expansion go ahead.
We set the standard within the New Zealand dairy sector in terms of energy efficiency, especially in our newer plants – the likes of the recently installed dryers at Darfield and Pahiatua, for example – where new technologies are bringing significant reductions in energy use.
Despite our manufacturing capacity increasing to keep pace with growing milk volumes – up 26 per cent in the last five years – more sustainable practices have allowed us reduce our energy intensity by 16 per cent since 2003. To put this into context, the amount of energy we have saved would be enough to power all the households in Wellington City for more than two years.
This energy saving is a reflection of rigorous and ongoing review of our energy mix and constant fine-tuning of our operations to help deliver on our strategy.
Currently, coal is the only truly viable energy source for dairy manufacturing in the South Island. We remain committed to identifying more efficient and sustainable options. In the meantime, we are focused on ensuring we manage our coal use as responsibly and efficiently as possible.
We have a responsibility to our farmers and, indeed, all New Zealanders for the impacts of our decisions and we do not take this responsibility lightly. While getting the best returns for our farmers will always be our focus, this will never take precedent over our commitment to environmental sustainability.