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Speaker 1: Right now, though, Fonterra is set to invest one hundred

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Speaker 1: and fifty million dollars to convert its North Island gas

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Speaker 1: boilers to electricity. It's a move that will lower its

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Speaker 1: total gas use by almost forty Chris Caine is Fonterra's

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Speaker 1: director of Global Engineering and Technical Hey, Chris Kira, al right,

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Speaker 1: how are you going? Yeah, really good, thank you. So

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Speaker 1: until now you've been converting your coal boilers. Why are

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Speaker 1: you now moving on to gas.

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Speaker 2: Well, we've always had a plan to convert gas boilers

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Speaker 2: at a point in time, but downstream security, they are

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Speaker 2: rising costs of gas and carbon just makes us an

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Speaker 2: opportune time for it to get on with that.

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Speaker 1: So it's what one hundred and fifty million dollars to

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Speaker 1: do this? Is that right?

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Speaker 2: That's correct. There are there rights across three sites for

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Speaker 2: Edgecomb and a small portion at our White Eye site.

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Speaker 1: Is this in relation to in reaction to the gass

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Speaker 1: you know, spot price hikes that we've seen in recent times.

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Speaker 2: Well, look, we've got long term gas contracts in place

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Speaker 2: and we're not so much effected by that. But as

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Speaker 2: I mentioned, it's always our plan to get out the

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Speaker 2: fossil fuels and the security supply is probably top of mind,

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Speaker 2: so it just made sense for us to bring that

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Speaker 2: forward a little bit.

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Speaker 1: The fact the government's saying they're going to open up

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Speaker 1: for oil and gas again, that doesn't change the situation

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Speaker 1: for you.

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Speaker 2: I don't think. So there are primary focus and make

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Speaker 2: sure we've got a reliable security energy source for our sites.

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Speaker 2: Very critical to make sure we can process our farment's milk.

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Speaker 2: So they'll do what they have to do, but we'll

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Speaker 2: have to make the cause that is the best interests

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Speaker 2: of Fonterra.

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Speaker 1: What'll it cost you to run electricity versus gas?

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Speaker 2: All wouldn't be able to share that with the offline.

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Speaker 2: But look, in the long run, we see gases getting

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Speaker 2: more expensive, we see carbon prices increasing, and we see

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Speaker 2: electricity as a reliable and economic, secure source of energy

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Speaker 2: for the future.

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Speaker 1: Will it be more expensive Initially it.

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Speaker 2: Might be a tad more expensive, but in the long

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Speaker 2: run it'll be more economicarticularly where the gas prices are

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Speaker 2: going in carbon.

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Speaker 1: Takes a lot of people say this is ironic. You

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Speaker 1: know your Fonterra, it's dairy. The impact that has on

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Speaker 1: you know, global warming versus a couple of boilers.

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Speaker 2: Well maybe the case with an actual fact. You know,

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Speaker 2: we're probably fifty percent of New Zealand's process heats, so

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Speaker 2: our scope one and two emissions are very large by

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Speaker 2: New Zealand context, and I think everything we do is

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Speaker 2: actually is great for the environment and great for our

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Speaker 2: carbon Do.

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Speaker 1: You would all worry about the electricity sector more generally

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Speaker 1: the fact that we are relying on electricity. We have

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Speaker 1: had problems with gas, and you know, we're largely renewable,

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Speaker 1: and then we have winters that don't do the things

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Speaker 1: that we need it to do. We doesn't rain enough, whatever,

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Speaker 1: we start to run into problems. Is that as legitimate

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Speaker 1: concern for you?

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Speaker 2: Look maybe in the short term. I think in the

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Speaker 2: long term in New Zealand is a wonderful country for

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Speaker 2: renewables generation. I don't think we have a problem with

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Speaker 2: I think the immediate and short and medium term problem.

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Speaker 2: Short term problem is transmission distribution. So now these projects

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Speaker 2: of PHACE can then around at the back end of

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Speaker 2: twenty twenty six and then stage two at FIAH probably

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Speaker 2: towards twenty seven twenty eight. So we're pretty confident now

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Speaker 2: we can get the transmission distribution up. We're very comfortable

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Speaker 2: and confident around the country's ability to supply renewable energy.

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Speaker 2: So I think long term that's the view we'll take,

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Speaker 2: and we're very comfortable with that.

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Speaker 1: And all said and done, once you've done made these

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Speaker 1: two major changes, how much of your operation will be

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Speaker 1: run by coal, how much by gas, how much by electricity?

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Speaker 2: Well, it's a good question. You know, the South Island

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Speaker 2: we're getting off coal very quickly, so we've got a

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Speaker 2: mixture of the coal and biomass and it's pramptly switching

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Speaker 2: into biomass electricity. North Island we're heavily leveraged on gas

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Speaker 2: because it's reticulated, so this is probably the first moving

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Speaker 2: off gas there, so you know, electricity becomes a bigger portion.

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Speaker 2: I don't have the figures on top of my head,

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Speaker 2: but you know, give you some sins now by twenty

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Speaker 2: thirty will be fifty percent reduction emissions from Scope one

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Speaker 2: until which means only fifty to seventy fossil fiells and

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Speaker 2: probably at the end of twenty seven I think will

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Speaker 2: be about thirty three percent of the way there. So

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Speaker 2: that gives you sort of an idea of that sort

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Speaker 2: of trajectory towards renewables.

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Speaker 1: Okay, because you had hoped to be completely coal free

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Speaker 1: by twenty thirties, is that still going to happen?

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Speaker 2: No, that's not correct. Now, twenty thirty seven is a

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Speaker 2: cessation date for coal, and that was always our targets

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Speaker 2: about a coal by twenty thirty seven, and we are

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Speaker 2: breaking the back of it at present, then towards the

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Speaker 2: end of the decade, but it will stoke some time

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Speaker 2: to be totally off coal.

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Speaker 1: Are you? Are you but loose on that date?

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Speaker 2: Well, twenty thirty seven is a firm date and we

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Speaker 2: have to be before that, but we have to manage

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Speaker 2: the workload, we have to manage our security of supply.

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Speaker 2: So now I think we'll be before that date. But

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Speaker 2: twenty thirty seven is a drop that date.

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Speaker 1: Okay, what happens if you don't? You just broken a promise.

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Speaker 1: There's no agreement, your.

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Speaker 2: Sign it won't it won't be an option because you know,

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Speaker 2: as I say, twenty thirty seven, there's a secession. We

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Speaker 2: won't have a consent to burn coal after that, and

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Speaker 2: we have public commitments and we have you know, security

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Speaker 2: the supply. So again I'm confident will be before twenty

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Speaker 2: thirty seven. We have to be.

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Speaker 1: All right, Chris, thank you very much for that. That's

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Speaker 1: Chris Kane, the director Global Engineering and Technical at Fonterra.

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