Fonterra steps up efforts to reduce greenhouse gas emissions

Fonterra said today that it is committed to making further reductions in greenhouse gas emissions per unit of product as preparations get underway for international climate change negotiations in Copenhagen.

“Fonterra has already cut energy use per tonne of product by 34 per cent since 1990,” says John Hutchings, Fonterra’s General Manager Sustainable Production.

“Our annual saving over the past five years is equivalent to the electrical energy use of about 100,000 households. This equates to a reduction of 265,000 tonnes of carbon dioxide equivalent below normal business levels every year.”

The Co-operative has set a forward target of an annual 2 per cent improvement in energy use per tonne of product for its milk processing operations.

A recent study of the carbon footprint of Fonterra’s major dairy products showed New Zealand farmers are among the most emissions-efficient producers of milk in the world. Their emissions efficiency has been improving at the rate of about 1 per cent per year since 1990.

“Along with other businesses we will face substantial cost increases from July next year as a result of the Emissions Trading Scheme (ETS), and we’ll continue our drive to make further emission reductions below business as usual levels,” says Mr Hutchings.

“These costs will be greater for Fonterra than for many other exporters because the Government’s amendments to the ETS, which have been designed to protect trade-exposed firms, do not extend to dairy processing.

Under the revised ETS passed in Parliament last week, dairy processing will not be eligible for allocations of emissions units, which the Government is providing to some emissions-intensive firms to enable them to remain internationally competitive. For Fonterra, the total cost of emissions under the ETS amounts to $79 million in 2013, rising to $115 million in 2015.

“This will potentially impact on our ability to remain competitive internationally until our overseas competitors also face a price on carbon. So we are going to be pushing even harder in the business around our efforts in emissions reduction.”

Mr Hutchings says that Fonterra is investing millions of dollars, in partnership with Government, in leading edge research to further reduce the dairy industry’s carbon footprint. The Co-operative is also looking at fuel change options and new technologies to further reduce emissions.

Mr Hutchings says Fonterra will also continue to work with the Government to establish an international and domestic climate change policy which reflects world demand for efficiently produced food and addresses the risks posed by the ETS to the competitiveness of dairying in New Zealand.