Campaign FAQ: Fonterra Quit Coal

What does Fonterra use coal for?

Coal provides the heat to dry milk in the production of milk powder in ten of Fonterra’s milk powder plants. Some of Fonterra’s North Island plants use gas, but all their plants in the South Island – where there is no natural gas – use coal.

Why does it matter if Fonterra burns coal?

Coal cooks the climate. It is the most carbon-intensive fuel. If we are to keep climate change to less than 2 degrees of warming, as most nations have agreed, most of the coal that exists must stay in the ground. All coal users need to start phasing out their coal use and replacing with renewable energy.

Why are you campaigning against Fonterra? Don't lots of companies still use coal?

Fonterra uses more than half a million tonnes a year of coal. Worse, Fonterra is aggressively growing its coal use. Since 2008 its coal use has grown by about 38% and another big plant with 4 new boilers is planned. This cancels out all the good work done by other businesses and individuals to reduce their emissions.

The biggest coal user in NZ is the New Zealand steel mill at Glenbrook, which doesn’t have an alternative at present. The steel process needs the carbon in coal to produce coke to make iron. There are other technologies on the way but they are not a commercial option at this stage.

Fonterra is one of the top three users of coal in New Zealand, and it does have alternative options, but has chosen to expand its use of coal instead. What’s more, as a global company that trades on New Zealand’s “clean and green” image, Fonterra has a particular responsibility to walk the talk at home.

But doesn’t Fonterra have to use coal where it doesn’t have gas? Surely they’d use something else if they had the choice.

Anything that can produce a lot of high temperature heat can dry milk. That includes wood, other waste biomass fuels, plants like the grass miscanthus, and if technology can improve efficiency and reduce cost, eventually electricity.

The best alternative right now is waste wood – the huge quantities of forest residues that are left on landing sites in the forests after logging.

Why do you want our forests cut down to feed Fonterra’s boilers?

We don’t. Less than half of every tree harvested goes to timber. The rest is waste – branches, prunings, damaged logs. This is not the leafy stuff that should be left behind on the forest floor to return nutrients to the soil. It is stockpiled at the landing sites and either left to rot in big heaps, or burned on site. There are already companies who collect this, chip it and dry it if required, and provide it to industries needing boiler fuel.

Surely Fonterra knows this? Surely they’ve done their homework here?

Fonterra has had some preliminary discussions, and probably even some tentative trials, of waste wood and miscanthus grass, but these plans have not advanced.

Fonterra is a big company, and we know there are people within Fonterra who share our desire for Fonterra to get off coal, and have even done some work towards that goal. But that’s as far as Fonterra has got with its homework. We think it needs to try much, much harder.

You can’t really blame them if coal is cheaper – they have to think of their farmers

Coal is cheap because it is in decline worldwide. It is cheap because it doesn’t pay its true costs – either the costs to people's health from breathing coal smoke, or the costs to the climate.

Under the current Government’s Emissions Trading Scheme, Fonterra has been paying next to nothing for the greenhouse gas emissions from its coal boilers. That’s not going to last forever. As climate change accelerates, a future Government will put a meaningful price on carbon emissions. Fonterra should be preparing for that day – and helping to save the world’s climate from catastrophic change – by making a commitment to not develop any new coal boilers, and by embarking on a meaningful, measurable programme to replace existing coal boilers over time with renewable sources of energy.

Can you even use wood in these boilers? Does anyone else in New Zealand do that?

You most certainly can. Here is a short and by no means complete list of coal boilers that use wood waste rather than coal – many of which have converted from coal to wood:

  • The University of Otago

  • Many schools

  • Invercargill City’s greenhouses

  • Splash Palace, the Southland aquatic centre

  • McCallums laundries in Invercargill

  • Burwood Hospital in Christchurch, which is building a brand new, state of the art wood-burning boiler.

These boilers are all smaller than the ones Fonterra needs, but Kinleith mill has a wood fired boiler as large as Fonterra wants, and overseas, particularly in Scandinavia, there are much bigger ones.

But surely burning wood releases carbon dioxide. So isn’t it just as bad as burning coal?

Yes, burning wood does release carbon dioxide – indeed, coal started out, many millions of years ago, as dead plants. But there is one vital difference: coal can’t be replanted, but forests can – and growing forests absorb carbon dioxide from the atmosphere. Each tree that burns or rots releases only the carbon it has absorbed from the atmosphere during its lifetime. So long as forests are planted to replace those that have been cut down for wood, there is no net increase in carbon dioxide emissions.

This article provides useful background on why we need an urgent transition away from fossil fuels: The End of Ancient Sunlight.

Is there even enough wood for Fonterra to use?

This is a regional, rather than a national, question. Wood is bulkier than coal so there is a limit to how far you can economically transport it. Therefore it makes more sense in some areas than others.

It also depends on the type of boiler. A high quality wood burner designed for wood fuels can burn a wide range of biomass, making the potential fuel supply very large. A cheap low quality burner will require high quality wood chip that has been dried – a much more expensive fuel. Installing a high quality burner will pay for itself very quickly by using cheaper fuel.

Wood supply merchants have told us they could supply enough waste wood for Fonterra’s new proposed plant at Studholme, which is the first priority. A wood industry expert has calculated that there is enough waste wood within economic distance to feed the three North Island plants in the Waikato. We don’t have a full analysis for every plant, but for those we have looked at, the answer is yes.

If Fonterra commits to and follows through on a programme to progressively convert existing boilers to use wood waste, that will help grow the forestry industry and forestry jobs.

So what we want is a win-win situation: more of the tree gets used instead of wasted; Fonterra’s and hence the nation’s greenhouse gas emissions are reduced; and the forestry industry gets a major new customer, creating both jobs and greater certainty.

Surely Fonterra can’t stop using coal right away?

We agree – but that’s not what we’re asking for. First, we want Fonterra to commit to “no new coal boilers” – that is, to use wood, not coal, in new boilers it’s currently planning, like at Studholme. Then, we want Fonterra to commit to – and fully carry out – a programme to phase out coal boilers at its existing plants as they age.

It's all very well to tell Fonterra to stop using coal, but won't that hurt struggling dairy farmers?

Coal is generally cheaper than wood chips (though the price difference varies a lot on different parts of the country), but that’s partly because wood chip supply currently lacks economies of scale. If Fonterra makes a commitment to using wood, that should help lower the price of wood chip supply. If they commit to quality purpose-built burners that will allow much cheaper fuel to be burned.

However, the price of fuel is only one relatively small component of Fonterra’s costs – and has very little effect compared to the massive fluctuations in international dairy prices.

So, even without an effective carbon price, we don’t think dairy farmers would see much difference if Fonterra switched from coal to wood – and once a meaningful price on carbon emissions from fossil fuels is in place, dairy farmers should benefit from such a move.

What about our economy? It depends on Fonterra!

Our economy is far too dependent on Fonterra. But Fonterra’s current model of using lots of energy to add little value isn’t working for its shareholders, its farmers or the nation. It’s part of a vicious circle that forces farmers to run high stock numbers and take on crippling levels of debt. And there is good reason to believe that farmers could make greater profits by running less stock. 

So while we’re calling for Fonterra to choose a different fuel for its milk powder plants, we also want Fonterra to think again about its economic model and start investing more in making high-value products – as it is doing in its new Edendale plant expansion.

If Fonterra uses less coal, won’t that put even more coal miners out of work?

Over the past few years, as international coal prices have fallen, the coal industry has proved more than capable of putting hundreds of miners out of work without any assistance from us. That’s especially true of state-owned coal miner Solid Energy. But it’s true that some private companies, notably Bathurst Resources, are keeping themselves afloat by selling coal to Fonterra.

If Fonterra first stop building new coal boilers, and then initiate a phased programme of conversions of existing boilers from coal to wood, then jobs in the coal industry will gradually phase out as miners retire and mines are depleted and close. But the great news is, it would lead to the creation of many more jobs in the wood industry.

And if Bathurst Resources did fall over, that might stop their attempts to rip apart the beautiful and biodiverse Denniston Plateau for coal. 

Have you tried talking with Fonterra about this?

Auckland Coal Action, a group affiliated with Coal Action Network Aotearoa, has had these discussions with Fonterra in the context of Fonterra’s plans to open a new coal mine in the North Waikato - a plan they have now put on hold.

At those meetings, the Fonterra middle-management staff were friendly, sympathetic, and courteous. They listened. They expressed the intention to act. And what did Fonterra do? Nothing.

We are happy to talk with Fonterra about how they can reduce their coal use. We’re happy to help them develop a programme of action. But the key word is action. Until Fonterra move beyond nice smiles and give up on their plans for new coal boilers, we don’t think talking is getting us – or the climate – very far.

What is Coal Action Network Aotearoa?

CANA is a national organisation working to phase out coal mining and coal usage in Aotearoa/NZ by 2027, initially by opposing new and expanded coal mines. We do this because we recognise the mining and burning of coal as the biggest threat to the world's climate system. We want to be part of a just transition to a coal-free Aotearoa New Zealand. For more, see http://coalaction.org.nz/about

What else does CANA do apart from campaigning against Fonterra?

We campaign against plans for new and expanded coal mining throughout the country. Our biggest campaign was against Solid Energy's plans to mine and burn billions of tonnes of Southland lignite (brown coal). Now that those plans have fallen over, we continue to guard against other attempts to exploit Southland lignite.

We are also working on:

  • Promoting a just transition away from fossil fuels which safeguards coal communities and the livelihood of coal workers. Read all about the Just Transition approach, how it’s worked overseas, and how it could work in New Zealand in our report Jobs After Coal: A Just Transition for New Zealand Communities.

  • Preventing Bathurst Resources, an Australian coal company that has relocated to New Zealand, from carrying out its plans to mine millions of tonnes of coal from the beautiful and biodiverse Denniston Plateau. While international coal prices are low, Bathurst is relying on supplying Fonterra boilers with coal to keep it financially afloat, so getting Fonterra off coal would also help the Denniston campaign.

  • Making investment in new coal mines, and the industrial use of coal, culturally unacceptable and economically impossible. This includes our involvement in the campaign to encourage institutional investors to divest from coal and other fossil fuels.

How can I get involved with CANA?

There is lots you can do, but here are the first steps towards getting involved:

∙ Join our mailing list so you can find out how to get involved in our current campaigns. Use this link: http://eepurl.com/mcWjn or email coalactionnetwork@gmail.com

∙ Donate to CANA: http://coalaction.org.nz/donate

∙ Follow our blog: http://coalaction.org.nz

∙ Like us on Facebook: https://www.facebook.com/CoalActionNZ

∙ Follow us on Twitter: https://twitter.com/coalaction

Then, follow what we’re up to and how you can get involved.


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