French dairy company Danone is to spend $40 million towards making it's Balclutha milk powder plant carbon neutral.
The plant processes raw milk sourced from 18 local farms into powder that is used as the base for production of leading Infant Milk Formula (IMF) brands including Aptamil and Karicare.
It said the move would be driven primarily by the installation of a $30 million state-of-the-art biomass boiler that will reduce the plant's CO2 emissions by 20,000 tonnes per year.
Boilers play a central role in spray drying - the process of converting milk into a dry powder through the application of heat - with around 85 percent of the entire plant's energy consumption coming from steam production.
It said unlike gas or the more common coal-powered boilers, Danone's biomass boiler would be powered by sustainable wood fuels, which would be sourced locally, therefore delivering a positive economic impact.
Danone's New Zealand Operations Director, Cyril Marnique said it was expected to be New Zealand's first carbon neutral plant of its kind.
"We share the New Zealand Government's ambitions in delivering a low-emissions, climate resilient future," he said.
The company had set a target of becoming a carbon-neutral - from farm to family - by 2050.
"It is through key investments like this one that we take a step forward towards reaching this ambition," said Marnique.
Agriculture Minister Damien O'Connor welcomed the announcement and said was encouraging to see that companies are willing to make this kind of investment.
"It's really good to know that there are alternative low emission options for processing in the agriculture sector," he said.
"This announcement today comes off the back of Fonterra's decision a few weeks ago to move away from using coal," said O'Connor
"It's not just farmers who have a role to play, processors are also part of the solution and it's really heartening to see companies starting to step up and acknowledge the part they need to play in tackling climate change".
Climate Change Minister James Shaw said it was another demonstration of how the Government's programme of action around climate change was providing the incentives people have been looking for to do what they can to address global warming.
"From clean car discounts on low emission vehicles, to $14 billion investment in public transport and other clean travel options, to supporting farmers to manage, measure and reduce agricultural greenhouse gases, New Zealanders can see the future is in sustainable low emissions choices and they're now making those choices," he said.