Fonterra moving in right direction.

Fonterra moving in right direction, but much faster action needed

Fonterra’s recent announcement that it will be installing no new coal boilers from now on is a significant step in the right direction, but does not result in any immediate reduction in coal use. Coal boilers can have a life of more than 30 years, so phasing out of coal by this step alone would be far too slow. Much faster action is needed by Fonterra to reduce its emissions.

The recent IPCC report (Special Report on Global Warming of 1.5 degrees C, October 2019) says that emissions need to fall globally by around 45% below 2010 figures by 2030, but it also says that coal emissions need to fall by around 67% by that date. As a developed country with the necessary expertise and resources, we should be aiming considerably higher than this. A complete phase-out of coal by 2030, or even by 2025, needs to be seriously considered.

Fonterra has other options. For example, a lot of off-cuts from forestry that could be used to power boilers currently go to waste. Trees and other biomass can also be specifically grown to supply fuel. This is an environmentally sustainable way of operating provided there is re-planting as the energy sources are used.

Natural gas is not a good alternative because use of this fossil fuel also needs to rapidly fall. But from an environmental point of view, moving to electricity is a good option because around 80% of the energy currently comes from renewable resources and we have the potential to increase this rapidly towards 100%, if the right steps are taken.

One reason coal and other fossil fuels are still widely used is that they appear to be low cost options. But this doesn’t factor in the cost of the damage caused. The recent IPCC report estimates the damage cost at above US$100 per tonne of CO2 (about NZ$150 / tonne CO2). New Zealand’s Productivity Commission has already concluded that we should price emissions to reflect their harm (Low Emissions Economy, final report, August 2018). Hence, we believe New Zealand’s carbon charges need to rapidly rise to at least this level. It would be prudent for Fonterra to plan on this basis.

So, in summary, it is good that Fonterra has taken this step, but it also needs to immediately start making major reductions in its coal use.