Government teams up with Fonterra to cut coal use, reduce emissions equivalent to taking 120,000 cars off road

The Government is working with Fonterra to cut coal use at its dairy factories which could reduce emissions equivalent to taking 120,000 cars off the road. 

The partnering, dubbed "hugely significant" by Prime Minister Chris Hipkins, will see Fonterra cutting ties with coal use at six of its manufacturing sites, resulting in approximately 2.1 million tonnes of earlier CO2e reductions.

Prime Minister Hipkins said the commitment means the dairy sector will "dramatically cut its coal use quicker.

"This is not just critical for our environment, but for our economy too," he said.

As international consumers and food manufacturers demand further climate commitments, Prime Minister Hipkins said the commitment will help "maintain New Zealand dairy's competitive edge".

The Prime Minister has recently been travelling across the globe to meet with world leaders. Hipkins said he's heard first-hand how important Aotearoa's climate credentials are to our exports. 

"This partnership is an investment in our future economic prosperity."

Prime Minister Hipkins said the partnership will help accelerate Fonterra's reductions in emissions, with an expected halving of their coal use by 2030. This will deliver a big chunk of New Zealand's overall pollution cuts, he said.

He said as the international environment proves "challenging" for Fonterra and farmers, the Government is teaming up with Fonterra to reduce emissions faster.

"The Government is getting runs on the board with our Emissions Reduction Plan. These partnerships with big emitters are reducing pollution, helping build momentum and ensuring we are keeping up with our international competitors."

The Government will co-fund up to $90 million from its Investment in Decarbonising Industry (GIDI) Fund, which is paid for through the Emissions Trading Scheme.

Fonterra has about $790 million in investment planned in order to meet the revised decarbonisation target.

"Government backing has unlocked a revised and critical new target - achieving a 50 percent reduction in carbon emissions by 2030 - which is an increase on its original target of 30 percent, measured from a 2018 baseline," Energy and Resources Minister Megan Wood said.

Minister Woods said the partnership will help meet Aotearoa's domestic and international emissions reduction obligations by 2030.

"This agreement, second in magnitude to the cuts secured at NZ Steel, delivers 1.17 million tonnes of CO2e cuts, 2.69 percent of the total emissions reductions required in New Zealand's second emissions budget between 2026 and 2030."

Climate Change Minister James Shaw said the deal is of "national significance".

"It is expected to deliver over seven percent of the targeted cuts to pollution from the energy and industrial sectors, in our second emissions budget, and over four per cent of our third emissions budget."