Chris Kane: Fonterra Director of Global Engineering on the company's plan to invest more into electrification

Fonterra is investing $150 million into electrification over the next 18 months.

The collective says the projects across the North Island are a significant step towards its climate goals and operational resilience. 

It includes electric boilers at the Whareroa, Edgecumbe, and Waitoa sites - and more fleet decarbonisation. 

Fonterra's Director of Global Engineering, Chris Kane, says the rising costs of gas and carbon made it an opportune time to make the switch. 

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Episode Transcript

Speaker 1 (00:00):
Right now, though, Fonterra is set to invest one hundred
and fifty million dollars to convert its North Island gas
boilers to electricity. It's a move that will lower its
total gas use by almost forty Chris Caine is Fonterra's
director of Global Engineering and Technical Hey, Chris Kira, al right,
how are you going? Yeah, really good, thank you. So
until now you've been converting your coal boilers. Why are

(00:22):
you now moving on to gas.

Speaker 2 (00:25):
Well, we've always had a plan to convert gas boilers
at a point in time, but downstream security, they are
rising costs of gas and carbon just makes us an
opportune time for it to get on with that.

Speaker 1 (00:37):
So it's what one hundred and fifty million dollars to
do this? Is that right?

Speaker 2 (00:41):
That's correct. There are there rights across three sites for
Edgecomb and a small portion at our White Eye site.

Speaker 1 (00:47):
Is this in relation to in reaction to the gass
you know, spot price hikes that we've seen in recent times.

Speaker 2 (00:56):
Well, look, we've got long term gas contracts in place
and we're not so much effected by that. But as
I mentioned, it's always our plan to get out the
fossil fuels and the security supply is probably top of mind,
so it just made sense for us to bring that
forward a little bit.

Speaker 1 (01:10):
The fact the government's saying they're going to open up
for oil and gas again, that doesn't change the situation
for you.

Speaker 2 (01:16):
I don't think. So there are primary focus and make
sure we've got a reliable security energy source for our sites.
Very critical to make sure we can process our farment's milk.
So they'll do what they have to do, but we'll
have to make the cause that is the best interests
of Fonterra.

Speaker 1 (01:32):
What'll it cost you to run electricity versus gas?

Speaker 2 (01:37):
All wouldn't be able to share that with the offline.
But look, in the long run, we see gases getting
more expensive, we see carbon prices increasing, and we see
electricity as a reliable and economic, secure source of energy
for the future.

Speaker 1 (01:53):
Will it be more expensive Initially it.

Speaker 2 (01:56):
Might be a tad more expensive, but in the long
run it'll be more economicarticularly where the gas prices are
going in carbon.

Speaker 1 (02:02):
Takes a lot of people say this is ironic. You
know your Fonterra, it's dairy. The impact that has on
you know, global warming versus a couple of boilers.

Speaker 2 (02:14):
Well maybe the case with an actual fact. You know,
we're probably fifty percent of New Zealand's process heats, so
our scope one and two emissions are very large by
New Zealand context, and I think everything we do is
actually is great for the environment and great for our
carbon Do.

Speaker 1 (02:28):
You would all worry about the electricity sector more generally
the fact that we are relying on electricity. We have
had problems with gas, and you know, we're largely renewable,
and then we have winters that don't do the things
that we need it to do. We doesn't rain enough, whatever,
we start to run into problems. Is that as legitimate

(02:49):
concern for you?

Speaker 2 (02:50):
Look maybe in the short term. I think in the
long term in New Zealand is a wonderful country for
renewables generation. I don't think we have a problem with
I think the immediate and short and medium term problem.
Short term problem is transmission distribution. So now these projects
of PHACE can then around at the back end of
twenty twenty six and then stage two at FIAH probably
towards twenty seven twenty eight. So we're pretty confident now

(03:11):
we can get the transmission distribution up. We're very comfortable
and confident around the country's ability to supply renewable energy.
So I think long term that's the view we'll take,
and we're very comfortable with that.

Speaker 1 (03:24):
And all said and done, once you've done made these
two major changes, how much of your operation will be
run by coal, how much by gas, how much by electricity?

Speaker 2 (03:34):
Well, it's a good question. You know, the South Island
we're getting off coal very quickly, so we've got a
mixture of the coal and biomass and it's pramptly switching
into biomass electricity. North Island we're heavily leveraged on gas
because it's reticulated, so this is probably the first moving
off gas there, so you know, electricity becomes a bigger portion.
I don't have the figures on top of my head,

(03:54):
but you know, give you some sins now by twenty
thirty will be fifty percent reduction emissions from Scope one
until which means only fifty to seventy fossil fiells and
probably at the end of twenty seven I think will
be about thirty three percent of the way there. So
that gives you sort of an idea of that sort
of trajectory towards renewables.

Speaker 1 (04:11):
Okay, because you had hoped to be completely coal free
by twenty thirties, is that still going to happen?

Speaker 2 (04:18):
No, that's not correct. Now, twenty thirty seven is a
cessation date for coal, and that was always our targets
about a coal by twenty thirty seven, and we are
breaking the back of it at present, then towards the
end of the decade, but it will stoke some time
to be totally off coal.

Speaker 1 (04:33):
Are you? Are you but loose on that date?

Speaker 2 (04:36):
Well, twenty thirty seven is a firm date and we
have to be before that, but we have to manage
the workload, we have to manage our security of supply.
So now I think we'll be before that date. But
twenty thirty seven is a drop that date.

Speaker 1 (04:50):
Okay, what happens if you don't? You just broken a promise.
There's no agreement, your.

Speaker 2 (04:54):
Sign it won't it won't be an option because you know,
as I say, twenty thirty seven, there's a secession. We
won't have a consent to burn coal after that, and
we have public commitments and we have you know, security
the supply. So again I'm confident will be before twenty
thirty seven. We have to be.

Speaker 1 (05:12):
All right, Chris, thank you very much for that. That's
Chris Kane, the director Global Engineering and Technical at Fonterra.
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