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

Transcript

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

• 0:09
  Speaker 1: You're listening to a podcast from newstalk ZEDB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio.
• 0:17
  Speaker 2: Right now though, Fonterra is set to invest one hundred
• 0:19
  Speaker 2: and fifty million dollars to convert its North Island gas
• 0:22
  Speaker 2: boilers to electricity. It's a move that will lower its
• 0:25
  Speaker 2: total gas use by almost forty percent. Chris Caine is
• 0:29
  Speaker 2: Fonterra's director of Global Engineering and Technical Hey, Chris Kira,
• 0:34
  Speaker 2: all right, how are you going? Yeah? Really good, thank you.
• 0:36
  Speaker 2: So until now you've been converting your coal boilers. Why
• 0:39
  Speaker 2: are you now moving on to gas.
• 0:41
  Speaker 3: Well, we've always had a plan to convert gas boilers
• 0:44
  Speaker 3: at a point in time, but downstream security, they are
• 0:49
  Speaker 3: rising costs of gas and carbon just makes us an
• 0:52
  Speaker 3: opportune time for it to get on with that.
• 0:54
  Speaker 2: So it's what one hundred and fifty million dollars to
• 0:56
  Speaker 2: do this? Is that right?
• 0:58
  Speaker 3: That's correct? There are the rights across three sites for
• 1:01
  Speaker 3: Edgecombe and a small portion at our White Eye site.
• 1:04
  Speaker 2: Is this in relation to in reaction to the gass
• 1:09
  Speaker 2: you know, spot price hikes that we've seen in recent times.
• 1:12
  Speaker 3: Oh, look, we've got long term gas contracts in place,
• 1:15
  Speaker 3: so we're not so much affected by that. But as
• 1:17
  Speaker 3: I mentioned, it's always no plan to get the fossil
• 1:20
  Speaker 3: fuels and the security of supplies probably top of mind,
• 1:24
  Speaker 3: so it just made sense for us to bring that
• 1:26
  Speaker 3: forward a little bit.
• 1:27
  Speaker 2: The fact the government's saying they're going to open up
• 1:29
  Speaker 2: for oil and gas again, that doesn't change the situation
• 1:31
  Speaker 2: for you, I don't think.
• 1:33
  Speaker 3: So there are primary focus and make sure we've got
• 1:35
  Speaker 3: a reliable security energy source for our sites, very critical
• 1:40
  Speaker 3: to make sure we can process our farments milk. So
• 1:44
  Speaker 3: they'll do what they have to do, but we'll have
• 1:46
  Speaker 3: to make the cause that is the best interest of Fonterra.
• 1:48
  Speaker 2: What'll it cost you to run electricity versus gas?
• 1:54
  Speaker 3: All we'll be able to share that with the offline.
• 1:56
  Speaker 3: But look, in the long run, we see gases getting
• 2:00
  Speaker 3: more expensive, we see carbon prices increasing, and we see
• 2:04
  Speaker 3: electricity as a reliable and economics secure so of energy
• 2:09
  Speaker 3: for the future.
• 2:09
  Speaker 2: Will it be more expensive?
• 2:12
  Speaker 3: Initially it might be a tad more expensive, but in
• 2:14
  Speaker 3: the long run it'll be more economic, particularly where the
• 2:17
  Speaker 3: gas prices are going. In carbon taks.
• 2:19
  Speaker 2: A lot of people will say this is ironic. You
• 2:21
  Speaker 2: know your Fonterra it's dairy. The impact that has on
• 2:25
  Speaker 2: you know, global warming versus a couple of boilers, Well.
• 2:31
  Speaker 3: Maybe the case with an actual fact. You know, we're
• 2:33
  Speaker 3: probably fifty percent of New Zealand's process heats, so our
• 2:36
  Speaker 3: scope one or two emissions are very large by New
• 2:38
  Speaker 3: Zealand context. And I think everything we do is actually
• 2:41
  Speaker 3: is great for the environment and great for our carbon Do.
• 2:44
  Speaker 2: You wo at all worry about the electricity sector more
• 2:48
  Speaker 2: generally the fact that we are relying on electricity we
• 2:53
  Speaker 2: have had problems with gas, and you know, we're largely renewable,
• 2:57
  Speaker 2: and then we have winters that don't do the things
• 3:00
  Speaker 2: that we need it to do. We doesn't rain enough,
• 3:02
  Speaker 2: whatever we start to run into problems. Is that as
• 3:05
  Speaker 2: legitimate concern for you?
• 3:07
  Speaker 3: Look, maybe in the short but I think in the
• 3:09
  Speaker 3: long term in New Zealand is a wonderful country for
• 3:11
  Speaker 3: renewables generation. I don't think we have a problem with
• 3:14
  Speaker 3: I think the immediate and short and medium term problem.
• 3:16
  Speaker 3: Short term problem is transmission distribution. So now these projects
• 3:20
  Speaker 3: of face can then around at the back end of
• 3:22
  Speaker 3: twenty twenty six and then stage two at FIAH probably
• 3:25
  Speaker 3: towards twenty seven twenty eight, so we're pretty confident now
• 3:28
  Speaker 3: we can get the transmission distribution up. We're very comfortable
• 3:32
  Speaker 3: and confident around the country's ability to supply renewable energy.
• 3:36
  Speaker 3: So I think a long term that's the view we'll take,
• 3:39
  Speaker 3: and we're very comfortable with that.
• 3:41
  Speaker 2: And all said and done, once you've done made these
• 3:43
  Speaker 2: two major changes, how much of your operation will be
• 3:46
  Speaker 2: run by coal, how much by gas, how much by electricity?
• 3:50
  Speaker 3: Well it's a good question. You know, the South Island
• 3:53
  Speaker 3: we're getting off coal very quickly, so we've got a
• 3:55
  Speaker 3: mixture of the coal and biomass and it's franptly switching
• 3:57
  Speaker 3: into biomass electricity. North Island we're heavily leveraged on gas
• 4:02
  Speaker 3: because it's reticulated, so this is probably the first moving
• 4:04
  Speaker 3: off gas there. So you know, electric becomes a bigger portion.
• 4:09
  Speaker 3: I don't have the figures on the top of my head,
• 4:10
  Speaker 3: but you know, give you some sins. No, by twenty
• 4:13
  Speaker 3: thirty will be fifty percent reduction emissions from scope on
• 4:18
  Speaker 3: until which means only fifty to seventy fossil fills, and
• 4:20
  Speaker 3: probably the end of twenty seven I think will be
• 4:22
  Speaker 3: about thirty three percent of the way they're So that
• 4:24
  Speaker 3: gives you sort of an idea of that sort of
• 4:26
  Speaker 3: trajectory towards renewables.
• 4:28
  Speaker 2: Okay, because you had hoped to be completely coal free
• 4:31
  Speaker 2: by twenty thirties, is that still going to happen?
• 4:34
  Speaker 3: No, that's not correct. Now, twenty thirty seven is the
• 4:37
  Speaker 3: cessation date for coal, and that was always our targets
• 4:40
  Speaker 3: about a coal by twenty thirty seven, and we are
• 4:42
  Speaker 3: breaking the back of it at present and towards the
• 4:45
  Speaker 3: end of the decade, but it will stoke some time
• 4:48
  Speaker 3: to be totally off coal.
• 4:49
  Speaker 2: Are you? Are you but loose on that date?
• 4:53
  Speaker 3: Well, twenty thirty seven is a firm date and we
• 4:55
  Speaker 3: have to be before that. But you know, we have
• 4:58
  Speaker 3: to manage the workload, we have to manage our security
• 5:01
  Speaker 3: of supply. So now I think we'll be before that date.
• 5:04
  Speaker 3: But twenty thirty seven is a drop that date.
• 5:06
  Speaker 2: Okay, what happens if you don't, you're just broken a promise.
• 5:10
  Speaker 2: There's no agreement, your sign, it.
• 5:12
  Speaker 3: Won't be it won't be an option because you know,
• 5:14
  Speaker 3: as I say, twenty to seven, there's a secession data,
• 5:16
  Speaker 3: we won't have a consent to burn coal after that
• 5:19
  Speaker 3: and we have we have public commitments and we have
• 5:22
  Speaker 3: you know, security to supply, so again I'm confident will
• 5:25
  Speaker 3: be before twenty thirty seven.
• 5:27
  Speaker 2: We have to be, all right, Chris, thank you very
• 5:30
  Speaker 2: much for that. That's Chris Kane, the director Global Engineering
• 5:33
  Speaker 2: and Technical at Fonterra.
• 5:35
  Speaker 1: For more from News Talk sed B, listen live on
• 5:37
  Speaker 1: air or online, and keep our shows with you wherever
• 5:40
  Speaker 1: you go with our podcast on iHeartRadio