The deal, announced by the Government on 20 July, will see Fonterra commit to undertaking a complex range of projects to cut primarily coal use across six manufacturing sites – resulting in approximately 2.1 million tonnes of earlier CO2e reductions. These emissions reductions are equivalent to taking around 120,000 cars off the road.
It is the second major deal of this type since May, when the Government announced a partnership with New Zealand Steel to build and operate an electric arc furnace at Glenbrook Mill which is anticipated to result in a one per cent reduction in New Zealand’s total annual emissions. Bell Gully assisted EECA with both projects.
Bell Gully consultant and market-leading climate change lawyer Simon Watt said the latest deal was another significant achievement for EECA. “These partnerships are making a strong contribution to the decarbonisation of the New Zealand economy and we are pleased to be supporting EECA in such significant work,” he said. “Accelerating emissions reductions through these partnerships supports both our domestic and international commitments and will help to build momentum as New Zealand moves towards net zero carbon emissions by 2050.”
Under the partnership, Fonterra, New Zealand’s largest dairy producer and exporter, will undertake an emissions reduction programme across its whole business, planning to invest approximately NZ$790 million to meet the revised decarbonisation target. The Government will co-fund up to NZ$90 million from the Government Investment in Decarbonising Industry (GIDI) Fund, which is paid for through the Emissions Trading Scheme and administered by EECA.
EECA will also work alongside Fonterra in coming years as they determine and deliver the best opportunities for reducing reliance on fossil fuels.
The Fonterra agreement delivers 1.17 million tonnes of CO2e cuts, 2.69 per cent of the total emissions reductions required in New Zealand’s second emissions budget (for 2026 to 2030) and 1.13 per cent of those required in its third emissions budget (for 2031 to 2035).
The earlier New Zealand Steel project is expected to reduce New Zealand’s total annual emissions by one per cent, equivalent to taking 300,000 cars off the road. That deal is estimated to contribute 5.3 percent of the emissions reductions needed under New Zealand’s second emissions budget and 3.4 percent of those needed under its third emissions budget.
Along with Simon Watt, Bell Gully associate Matt Fowler supported EECA on both transactions, while they and partner Zac Kedgley-Foot and lawyer Lothar Krumpen are engaged in ongoing work for the NZ Steel project. Chapman Tripp advised Fonterra and NZ Steel on the two transactions.