Fonterra spending $11 million to move away from coal, reducing carbon footprint by 84,000 tonnes

Fonterra is moving away from coal in one of its biggest factories.

The company has burned coal at all 10 of its dehydration plants across New Zealand for decades.

"Fonterra on average uses over 500,000 tonnes of coal per year" said Fonterra's sustainable energy manager Linda Thompson.

The company is the second-largest user after NZ Steel.

But rather than shying away from it Fonterra's spending $11 million to turn its sixth-largest site - at Te Awamutu - from a coal burner to burning wood pellets.

"This will be one of the largest conversions of a coal boiler to using wood pellets in New Zealand," said Thompson.

Ending the use of coal at the Te Awamutu plant will reduce its carbon footprint by about 84,000 tonnes a year.  That's the equivalent of taking about 32,000 cars off of New Zealand's roads.

"The pellets are essentially just compressed sawdust," said Nature's Flame Operations manager John Goodwin.

"Normally that would go directly to landfill, so we've essentially taken a waste product and turned it into a viable carbon neutral product," he told Newshub.

There's a big difference in the by-product. Wood pellet ash is organic and can be used in fertiliser where coal ash is toxic.

It's not perfect though - six truckloads of pellets need to be driven daily from Taupo to Fonterra's Te Awamutu site - that's 21 hours of driving time.

To cut coal at its nine other sites, it'd cost Fonterra, which last year posted a $600 million loss, hundreds of millions of dollars.

"We're wanting to do the right thing in this space and where we can we will be transitioning to renewable energy, but it's not overnight it's going to be a journey for us," said Thompson.

The journey's end is a goal of net-zero emissions by 2050 and leaving coal in the ground is an important start.