Jeannette Fitzsimons: Fonterra, It’s Time To Quit Coal
OPINION: Fonterra has applied for consents for a ten-fold expansion of its milk powder factory at Studholme, all of it expected to burn coal.
It's a puzzling decision: investing $800 million to make a low value commodity when many farmers are reducing production to save costs and Fonterra is struggling.
Fonterra is the third largest coal user in NZ,. It burns over half a million tonnes of coal each year to dry milk – and that's up 38 per cent since 2008. Now it plans another major expansion.
This matters because coal is the worst culprit in cooking the climate. Phasing out coal where alternatives exist is the least we can do for our grandchildren.
But, largely due to the fact that China's coal use is dropping, coal is now dirt cheap and, in the last four years, has got much cheaper.
New Zealand's Emissions Trading Scheme is supposed to put a price on carbon emissions and encourage alternative fuels but the taxpayer gifts Fonterra 60 per cent of their pollution for free and it only has to pay half of what is already a very low price for the rest.
Fonterra is very proud of having reduced its coal use per kg milk solids. But growth in output is so fast it has overwhelmed these efficiency gains and Fonterra's total emissions – which are all that matters to the atmosphere – are still growing.
We should expect Fonterra, our largest company, to develop the smartest strategy to make economic gains for NZ and the farmers — with the least environmental damage. Instead, Fonterra's current model of more cows, grazed more intensively, with more imported feed, more irrigation water, using more coal to process more milk, is not only hugely unsustainable, it is unprofitable for farmers, and for Fonterra itself.
A number of studies, such as this one, have shown that farmers, encouraged by Fonterra and the Government, have increased cow numbers beyond the point where inputs are costing more than they get for the extra milk. Each extra cow is losing them money. And that's not even counting the cost of the environmental damage to rivers, soils and climate.
There is evidence that cutting back on cow numbers, feeding them better on grass and saving the cost of inputs like imported feed would make more profit for farmers and reduce the environmental cost to rivers and the climate.
Whatever its strategy, does Fonterra have to use coal? It says yes. But our forests are full of damaged logs, branches, bark, and other wood waste that is left on skid sites or burned. There is a growing wood waste industry whose players will collect this, chip it, part dry it, and deliver it to customers.
There are several big boilers in Canterbury using wood waste instead of coal, with no net climate-changing emissions, and better air quality for local residents. A new boiler can be purpose-designed for wood, so that cheaper fuel can be used. Surely a new plant like Studholme, if it is to be built at all, is the place for Fonterra to start quitting coal?
Coal may be dirt cheap now, but a real price on carbon emissions could change this very fast. Has Fonterra factored this in, or do they think they are powerful enough to stop any government ever setting a real price on carbon?
The next question: is powder the most profitable use for milk?
The big expansion at Fonterra's Edendale plant has focussed on higher value products and dewatering by reverse osmosis, enabling the plant to process 1.4million litre more milk without a new coal boiler.
How much more money could Fonterra make for its farmers, its shareholders and the country, by investing the $800m earmarked for powder at Studholme in higher value products at its other plants?
Instead, the people of South Canterbury are being asked to accept more air pollution, more traffic, more coal trains, ocean discharges - and the farmers of the world are asked to suffer more climate change, droughts and floods. All to perpetuate a strategy that is not the most profitable for farmers, for Fonterra, for the nation or for the planet.
We think Fonterra can do better. We think Fonterra must do better. And the time to start is now.
Jeanette Fitzsimons, former Green Party leader, is a member of the Coal Action Network Aotearoa organising group.