Milk and coal in South Canterbury

This week, Fonterra’s application to expand its milk-drying factory and burn more coal at Studholme, in South Canterbury, is being put to the test. The local council is considering the application and hearing from people who’ve asked to make submissions.

It might come as a surprise to many people that Fonterra is one of New Zealand’s biggest coal users, if not the biggest. If Genesis Energy’s coal-powered electricity plant in Huntly shuts down on schedule in 2017, Fonterra will almost certainly be burning more coal than any other organisation in the country.

Coal is the worst fossil fuel for our climate. We need to stop burning it now if we’re to keep climate change in check. In the UK, the biggest coal-burning power plant is being converted to burn wood waste instead. Wood waste is much cleaner and its impact on our climate is much less than the impact from coal.

That’s what I think should be happening in New Zealand. Fonterra is slowly moving to burn less coal and more wood waste, or “biomass”, in its milk factories. That’s great, but it really needs to move faster, not build new coal-powered boilers like the ones at Studholme.

Fonterra is our biggest company – big enough that it could probably create a market and industry for biomass in New Zealand all by itself. If Fonterra announced a date on which it promised to stop burning coal, people in the fledgling biomass industry could start seeking out investment, building their capacity, planting more trees, and planning to supply Fonterra.

Fonterra should be leading the transition to a clean-energy future, instead of dragging its heels. Fonterra says “there are no viable alternatives to coal in the South Island at present” – but if Fonterra really wants there to be a viable alternative, it should be doing more to create that change.

The dairy industry is a huge user of coal in its milk factories
The dairy industry is a huge user of coal in its milk factories

25 Comments Posted

  1. Farmers should be extra pissed off about this tax haven situation. That haven money had held our NZD up. High NZD is costing farmers now. JK win-win though, he gets to pretend the strong NZD means good economic crap. And his international mates in Malta…

  2. Insightful comments from oldlux. Here is correction on two minor details:

    European milk quote ended in 2015, thus Europe had growth in milk volume. China saw it coming and paid over-price around 2013-14 to stimulate demand, thus creating the boom-bust (I like Chinese, clever 😉 The currency war is at the root of the milk price problem. (Oldlux is on the dot, talking about the growth requirement to service debt) Reducing herd size isn’t really an option at the farm level, especially in the Northern cold climate , shed and herd sizes must match, that’s the accountin of the fixed costs and debt. Europe as a whole wants to reduce volume… so now they now feed slightly less protein feeds, and volumes have stopped rising.

    “Steming from food supply failure” ??? No, its about Gas and Oil. We looked at this in our SustAg studies, and it’s half believable regarding the droughts. (I believed that for about 6month) Though talking with Syrian refugees, and reading non-NATO media perspective, we now agree it’s mostly Syria’s (massive off-shore) gas reserves, plus general fossil fuel traffic (bankster owned pipe-lines for Europe, etc), trillions of dollars in value. Also some religion war madness with a small but powerful group of mainly Israelis who believe that nuclear war is required to fulfill the book. I’ll be loosing readers if I mention that droughts can be stimulated. Haarp technology isn’t going to disappear, but control of it can be reclaimed, if we wake-up. Oh, and Syria has an independent central bank, so game on!!!

    If people are thinking that NZ’s coal usage is more important than the issues I just mentioned, then perhaps you need to broaden to education to economics and geopolitics, detox from your brain-washing (don’t panic go organic!) or just find higher quality buds.

    Can’t follow BJ’s comments on JK, despite his paraphrasing. JK worked for US FED, prior to joining NZ politics. JK comes from the NWO core. Obviously NZ and Australia are ideal new locations for NWO to escape too. Sleepy masses, easy to control, but we lack high culture, so London, Rome and Paris remain the top locations. (NY is slipping down the ranks, BJ for example) If anyone likes science but still hasn’t accepted the reality of NWO shadow world govt, then this link may help you: The Network of Global Corporate Control
    And a film named Incontrovertible. (New Pearl Harbour has better detail) Shows 2001 attack was inside job. Again, gas, oil and religion war politics, and debt system requirement.

    When US and Chinese diplomats talk about capping CO2 emissions, they are really talking about capping energy market trading. Global warming has been used to cap Russia’s gas exports to China… As oldlux points out, its the same pattern on every major issue.

  3. A quick read of the oil industry summary is like reading the Govt./Fontera milk price summary. A fractional increase compared to where it was is hyped by the industry to keep their share viability. Chris, I read that basically there has been a drop in usage that has suppliers lowering production to remove surpluses till prices can rise again. The explanation for the slump that is slightly improving has been the world finance downturn. I still contend a voluntary cutback is still in the figure but not analysed. If we look at the slump in world markets we have to realise a large and growing part of that is the growth model is being challenged by hidden costs to infrustructure. Include the Middle East wars that analysts say stem from food supply failure, are mainly the results of climate issues. Insurance payouts, thus costs are skyrocketing because of storm damage. All the refugees will burden the world hugely in growth prediction.
    I might be broad paint brush but I am convinced after watching for years that we are on the decline from our Baby boomer peak. The populations of large areas of the world will be moving into decline soon so the growth models can’t be sustained. Why do you think China is so hands on and are now allowing more than one child.
    I am happy teaching all that want to learn about sustainable living, and grow my gardens as I don’t feel I have to be part of the crazy growth myth.

  4. Oil demand is flat everywhere but the Americas and largely the US50 group. Interesting stats to make me wonder wonder WTF the US thinks it is doing… but then they have Lamar Smith as chairman of the House Committee on Science, Technology and Innovation (I think that was what the misnamed it).

    The need to work out the alternatives for drying milk isn’t a tweak. I think it is an actually useful thing to get done. In time, and not a whole great lot of it, the fact that we can it CO2 free, will make a useful difference for marketing purposes. We’ll still be too far by far from the other markets though. I can see how it might be a useful thing to be able to make milk powder and use it as part of making instant whatnot sustainably. 🙂

    In English cooking the whatnot is variously named but similarly flavoured 🙂

    Using fresh is better most ways. The business model is just… broken. Just as the business model that doesn’t care if we chase the last Fisher-Paykel plant out of NZ.

    Gullibility of New Zealanders is hard to argue against when they trust the man named the “smiling assassin” by his co-workers in the incomparably corrupt FOREX market.

    What sort of clue stick does it take anyway ? 🙂

  5. It is encouraging to see more people actually getting more bits of it.

    Local beats cheap and unsustainable. Permaculture appears to offer some modification of present food supply practices and coupled with an organic awareness may be a much better approach to food supply.

    Dairy is an unnecessary wasteful and overall destructive use of land abuse of the environment. It is not sustainable in its present form.

    Those who have invested in Dairy and others who are dependent on money from dairy, have a problem that we all will pay for if the present mess continues. Finding ways to make it marginally more viable for market returns looks like a lost quest long term as the environmental problems caused by Dairy and Beef are not likely to be resolvable without a large scale reduction of herds and vastly improved management of the land.

    The history of land management in NZ is a dismal one.

    Tweeks will do little to improve prospects of restoring the damage to land while finance and market constraints dictate how we harvest from land.

    Milk does not build healthy bones, quite the contrary.

  6. Chris Morris seems to me to be out of touch. The Greens are the more visible Parliamentary voice but the movement to get real about climate issues is growing huge. Trillions of dollars are being invested away from the fossil fuel industries. I believe the oil surpluses are part because more people are turning off their engines more often, to bike, bus, walk. I don’t believe commentators will say this though as it has huge implications to the Corporate world. A 5% reduction of fuel usage by those who care might look statistically irrelevant but it is enough to knock all the growth models that the ponsy finance systems work on, and stupid politicians parrot. The only problem is the out of touch tend to burn a bit more fuel because it is cheaper, putting the cost on to future generations, why the young thinkers are joining the process of rethink. Carbon pricing needs to be real and the funds used to use more carbon up with plant/farming usage, and investing in cleaner technology. This will happen, and groups like Fontera with unsustainable growth patterns will further lead farmers into loss as climate flooding, drought sucks the economic viability from their BAU approach. The surviving farmers are likely the ones to adapt, so the Greens are doing a service by evaluating the information and pointing in new directions. As people wake up to this the change will accelerate, look at the Green led state in Germany.

  7. Chris The reason we have to stop BAU is reality. We have an unsustainable business model and an unsustainable business.

    I won’t stop it, and it won’t be stopped because the Greens are politically powerful today. It will be stopped because what you are doing will create so much havoc with the environment that the Greens will be the dominant political party by 2030.

    It will be stopped because you are crapping in the well.

    I dealt with tanker schedules, and while the drying process wasn’t part of that the question of what alternatives are possible is important. Alternatives are not impossible, just harder that crapping in the well.

    Do the plants co-generate with the coal they are burning?

    The temperatures and energy flows required do not appear too difficult to attain by alternative means. Low grade heat in large quantities pulled from the environment using electricity? We CAN do that with a fair degree of efficiency.

    So the question is, and this is going to be important to Fonterra before another 5 years passes, what is the most efficient way to build these plants that does NOT emit CO2? Clearly they can be built so that they don’t burn coal. Likely many in other countries are burning gas.

    We cannot burn coal for this purpose. Unless the carbon in the coal is used in part of the chemical processes that create a product we have to stop burning it, so we’d better start figuring out how to do that.

    Given the problems with “free trade”, it is in the same category of reality as the Easter Bunny so we’d better start figuring out how to do with less. I have nothing against trade and business, but the ideals of the neo-liberal model are fantasies that Adam Smith and Ricardo both discarded.

    A managed mercantile policy is what New Zealand needs, and soon, because we’re not working smart at all. Those 800 million new customers are 800 million new competitors as well, and our ability to manufacture things here in New Zealand for ourselves is MUCH more important than either Labour or National have understood since Muldoon stuffed up his attempt to make our economy work for us.

    70 degrees C can be reached using heat pumps if the cold reservoir is not less-than-zero. Siting plants near the coast and using the ocean for the cold reservoir would give us a cold reservoir of 15 degrees at worst case… no problems there and it would get more effective in summer. Using solar and perhaps to saving up molten salt heat to supplement electrical resistance might get it to be efficient enough. We aren’t ever going to make “cheap” milk solids compared with the subsidized coal prices we get now, but we can quite certainly develop means to make it sustainably… and that will be no small thing for the future.

    See… I don’t take the notion that “it can only be done this way”. We can do things sustainably but we have to do the work. Real money represents work done. We have to collect the wind, collect the sun, collect the geothermal. The CO2 price sets the invisible hand to work and takes the unsustainable aspects out of the process more effectively than any speculations of mine. What can’t be done is BAU in a sustainable world.

  8. bj Is “I actually know quite a bit about the transport of the milk.” a euphemism for being a tanker driver?
    Yes milk is concentrated up to about 45% milk solids in sub atmospheric boilers, which work at about 70degC, but then it has to be sprayed dry in 200 degC air. They also have to have sterilisers before concentrators. From memory, the big dryer at Te Rapa does 15t/h of milk solids. That is a lot of steam needed and it needs to be reliably supplied.
    You can shout all you like – a party averaging about 10% of the vote and that has never been in power isn’t in a position to dictate the NZs let alone the world’s energy policies

  9. Knock-on-wood, for a land of milk and honey. Gareth is again talking in the right riddles.

    When talking about big money, we here in the German coal region often use the word coal, or “Kohle”. Obviously coal is ideal for drying milk. But I’ll agree with Gareth’s connotations, saying we need to reform how we use the Kohle.

    db’s oil tycoon quote actually got it right:
    “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”

    Elephant in the room – The banks are bankrupt! Any bank with derivatives and junk bonds is toast, and they all have derivatives and junk bonds. Cooperative banks like Rabo will be fine, and maybe Kiwibank and others should survive too, but these Citi Banks, JP Morgans, and the big four Oz banks like Westpac… all for sale, at a negative value. Who’s got the money to buy that debt. No one, accept for the central banking cartel, (the big five are US, EU, Japan, Swiss, London (China was traditionally USD hedged)) and they are just bailing banks out, not taking ownership.

    Return to state ownership, right? Minus the bad debt, naturally. What are the other options? How long can we let the central banking cartel print money to buy the bad debt off this planet-raping One Bank?

    More directly than the coal, Kohle or money, it’s the war machine that is killing us. And I’m not talking about their carbon footprint. (US will use a veto if anyone mentions the Pentagons carbon footprint) No, US and Israel have removed all their men from Turkey this week, while Erdogan (as hostage) was visiting in the US. Russia is ready to reclaim Iraq… it’s endless.

    So who owns the Industrial Military Complex? The Banks do, silly. The same banking cartel has funded both sides of the war since forever. Yes, especially the cold war, same cartel on both sides! Perpetual war is how the world is “balancing the books”.

    So the books of these mega companies are too complex to audit and no law firm is capable of putting them through receivership, certainly not on a free-falling market, with all corporate banks bust in the same bubble. So who is going to buy the banks if the banks’ debt is bigger than their assets?

    The Public Banking Solution’ its the only solution I can find, and no coal required. Just receivership laws and a little Sovereign Money. Oh, and skilled leaders to replace the current top layer of brainwashed and corrupt.

    So what happens if a country kicks out The Banks? Well, Russia did that in the last few year. So NATO-dark-knights and IMF debt, blew up the Ukraine, and media cartel cried, “Putin devil, Putin devil!” Aren’t the Russian sanctions actually just Russia refusing to use the SWIFT repo payment system, while the West refuses to pay in commodity? Russia is now the biggest gold buyer. Sorry to our anti-miners, but if the world is to survive, you can expect gold price to double, at-least for the transition phase. I think organic food is a better long-term commodity for countries to trade in, better than gold. Obviously I smoke pot. Organic food as commodity, ha.

    NZ Govt should buy Kiwibank off the Post Shop, using Sovereign Money. We should take BNZ back too. Ok, so BNZ, like all of them, is bankrupt, and no lawyer will be capable of settling their assets, while the only ones left on “the market” are the central banks and bots.

    So the One Bank owns the weapon factories, and circus in Syrian shows that banksters aren’t afraid to hit the panic button.

    The banks must be broken up and put back to state ownership, along with some measure of global debt default. Better than the current path of perpetual war, along with the full and permanent death of the middle class. Hey, the risk of some bankster launching a global nuclear war sounds a better end than “fantastic growth in the premium tourism sector” in a police-state where birds don’t sing.

    It’s keeping all those weapons factory workers employed, that concerns me. Post global reset. The war markets will dry up, so I’m proposing a big boost to the space programme. But we must improve our human-to-alien relationship. A tech guy like Gareth could sell the space programme idea.

    Was the Starship Enterprise funded by private banks? Or is public banking actually the paradoxical low-tech requirement for space travel? Let us boldly go where no NZ govt has gone before – let’s deport the big four banks back to Australia. Knock-on-wood and welcome to space travel.

  10. Burning coal for another decade.

    Why would you do that.

    The younger generation that are up with the play have a lot to say about such assumptions and they may possibly have children and grandchildren that will suffer dreadfully because of such assumptions.

    A plethora of changes are underway across food supply, population numbers and consequences, consumption of shrinking Nonrenewable Natural Resources, industrialisation, pollution and the interaction between these 5 key aspects of measure.

    Drawing conclusions through analysis of any one aspect in isolation is reductionist and often used for BAU pundits spin. Many are sucked in as perhaps it suits their current mindset.

    If hardship avoidance is a reason to burn coal now then I suggest greater hardship in the long term will be a consequence of burning coal that coal.

    What drives thinking that is locked into BAU information reference frames.

    It is obvious that IPCC reports are inadequate and updates show how conservative constraints on discussion are misplaced. IPCC mitigation paths shy away from disrupting BAU no doubt due to the influences in selecting panel members and pressures upon those members from transnational profiteers and political puppets. The latest plan is full of holes and relies on mythical technology not yet current or tested.

    We are running out of time and have been running out for over 40 years since recognition of out human population expansion problem and its known consequences was widely published.

    Nothing of any significance has been done in that time to intelligently manage our future. Radical changes are imperative to reduce the scale of a massive crash in human population.

    Why would you want to prop up continuing BAU.

    Radical change will be forced upon us and be well out of our control if left to the present business models and constrained political system preventing overdue changes.

    Reorganisation of how we live, distribute responsibility and manage our community and world, may be our best chance.

  11. So a vacuum process that boils off the water at a lower temperature isn’t used? Or is that 400 degrees already at a lowered pressure? What IS the alternative to using coal. I am guessing that it is going to wind up being electricity but is it a batch process? Can we use an intermittent source of power? How fast does it need to be done for the milk not to spoil.

    I actually know quite a bit about the transport of the milk. I daresay you’d be astonished. What I want to know about is the plant’s internal processes. That is not something Fonterra has needed to tell me.

    I’m paying attention to a reality. We CAN NOT keep burning coal. At best we’ll be permitted to do so for another decade, but 15-20 years from now when the problems we are making for our children are sheeted home, coal drying plants will be reduced to rubble by a society that understands their actual cost. This has to be addressed now or with no alternatives, this “industry” will shut down suddenly.


  12. A very significant transfer of assets to banking is likely to be realised.

    Yeah, I agree, but I’m 99.9% convinced the banks don’t actually want farms. The are not a liquid, tradeable commodity.

  13. The large banks will not loose in spite of their presentation of operation as loosely accepted by the general public.

    A very significant transfer of assets to banking is likely to be realised.

    The rural land is at least half owned by private banks and that is before the boom in farm prices promoted and enabled by the banks so effectively increasing their holding.

    Some people still believe the banks have the money they lend and also that deposits cover the loans.

  14. 2- Banks and middle men traders who are making massive profits from the HARD WORKING FARMERS and are basically greedy selfish lazy little shits!

    Without taking issue with your statement, I think the quote from Paul Getty is called for:

    If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.

    If dairy continues on it’s trajectory, then the banks will own a stupid proportion of New Zealand’s farms, and whatever banks are good at, they are not farmers, so one can only think it will end sadly.

  15. Several things. 1- Keeping vast herds of animals will eventually create a SERIOUS METHANE problem so UNSURSTAINABLE!!! 2- Banks and middle men traders who are making massive profits from the HARD WORKING FARMERS and are basically greedy selfish lazy little shits! 3- NO minimum sustainable farm gate price so WORKING FARMERS FLOURISH? Well thats a NO BRAINER! 4- Long term coal use. Probably increasing filter mechanisms and planting a vast forest of REDWOODS in local area for FUTURE PROFIT?

  16. There’s two aspect to this.

    First, for what they are doing, coal is a good match to their requirements. And lets not underestimate the scale; if I’ve read it right then we are talking about 120MW of boilers at full capacity. That’s quite a lot of energy in a single place in anyone’s book. So any candidate solution has to be capable of being in the same ballpark. Wood chips could do it, but they’ll need far greater volumes of material to burn than burning coal. Realistically, there aren’t a lot of other options, except, of course, electricity.

    But… coal is cheap, and electricity is, well, not cheap. And Fonterra are a price sensitive organisation. It is possible that if energy costs were significantly higher, then they may not have a business.

    Whoch brings us to issue two, which is Fonterra itself. For a while now, Fonterra has been pursuing a “volume first” strategy, They have a goal to be a 30 billion litre/year producer. Fonterra have (actually – had) been expanding, and their farmers have placed themselves into significant debt to build the farmgate capacity to meet the ambition.

    But…. since this strategy was formulated, there has been a significant change in the world dairy market, to the point where, if the media are to be believed, the farmers are being paid less for their product than the costs of production. That is not sustainable.

    I keep hearing that milk prices will “recover” at some future point, but see no evidence as why it is reasonable to believe that there will be a price recovery, and to what level it will occur. This makes me think that what we are talking about here is big boys gambling. Either, for whatever reason, prices will “recover” and stay “recovered”, and Fonterra and their farmers will emerge as an economic powerhouse. Or, milk production will continue to be an unsustainable activity, and the whole thing will collapse in a heap of debt.

  17. The dream worthy of critical analysis is the one where discussion of details purports to justify the present pattern of downward spiralling of our survival chances, albeit with modified modus operandi.

    Economics is currently a term used to justify the path we are on.

    A much longer term view is necessary if any credible analysis is to have merit.

    The milk debacle is a BAU adoption not an economic nor health imperative. We will not get out of this position by tweeking details such as energy used in drying milk so it can be reconstituted after packing and transportation.

    On health grounds alone dairy is an alarming proposition as well as being and environmental disaster, in NZ and globally.

    Alternatives could be a fruitful discussion but one best not confined to present BAU models.

    Reduction of Non Renewable Resource consumption needs to be a path if intelligent planning for mitigation of uncontrolled population decline is intended or desirable.

  18. bj
    It seems most dairy factories want their process steam at greater than 200degC. It is then cascaded down through the process. For thermal efficiency reasons, boilers produce the steam at around 400degC. The bigger dairy factories have back pressure steam turbines or co-gen sets. Milk is supposed to be greater than 90% water, isn’t it. That is a lot to evaporate off, and it has to be done very quickly to prevent deterioration
    It takes a lot of transport to move milk. That is why there isn’t a single super dairy factory. There seems to be no milk tanker run of more than 100km from the factory (or rail freight depot). Even then, the driver is likely to get only two runs a day. That is a lot of diesel burnt.
    And you are still chanting your idiotic mantra like a kindergarten kid. Coal burning is not subsidized in NZ. With regards to alternatives, just saying not to burn coal is not a sensible answer. Unless you can come up with a credible, viable and economic process, you will just be dismissed as a dreamer or worse.

  19. How hot does it have to be to dry milk? Serious question. The nature of the heat required is important if an alternative is to be suggested. Is this something that could be dealt with by sending the milk to the geothermal fields or do we have to double down in electricity?

    How hot?

    No matter what excuse is offered. We should not be burning coal. There’s no possible way to justify it given the real cost of the CO2. Finding other answers, and they WILL be more expensive in the current subsidized fossil fuel environment, is a necessary, not optional, task. I would rather spend the money and time to develop the alternative now, than wait until the climate forces us to alter the price we affix to the CO2. When that time comes, and it will, it will not matter what we have invested in it, there will no longer be any burning of coal, and if we have not prepared, the economic shock will be sudden and deadly.

    It is our responsibility to do better than that, and it is not as though we cannot.

  20. Both burning of coal and intensifying dairy are activities that sacrifice environment for short term cash.

    Not an economic model but a deficit based activity where we all pay eventually and end up with less.

    Wasteful and destructive.

  21. What fuel are you suggesting? Heat and energy is a very big cost for dairy factories. On the prices quoted in Energy News, for boilers, coal is about $4-5 / MWh, no natural gas is available in the South Island and pelletised wood is upwards of $18. And no, building bigger pelletising plants won’t make it cheaper. There aren’t the economies of scale people think there are. Ask why Solid Energy failed in Taupo. For bigger plants, costs would probably go up as they would have to truck it from further away.
    Or are you suggesting that NZ should be like Europe and sacrifice it’s industry with higher energy costs?

  22. Studholme is in South Canterbury NOT Southland — So if you can’t get that right I doubt anything else you have written is even worth considering

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