Government delivers next phase of climate action

Climate Change Energy and Resources Environment

The Government is delivering on a key election commitment to tackle climate change, by banning new low and medium temperature coal-fired boilers and partnering with the private sector to help it transition away from fossil fuels.

This is the first major announcement to follow the release of the Climate Commission’s draft package of advice to Government in February.

“Today’s announcements will make a real difference to New Zealand’s emissions profile, and are a significant boost to our clean energy sector, helping us on our path to a cleaner, smarter economy,” Minister of Energy and Resources Megan Woods said.

The ban on new coal boilers used in manufacturing and production will come into effect by 31st December this year. An option proposed is to also prohibit other new fossil fuel boilers where suitable alternative technology exists and it is economically viable.

The Government is also proposing to phase out existing coal boilers by 2037. In addition, consideration is being given to how to phase out other fossil fuels in existing sites through re-consenting processes and best practice requirements in a National Environment Standard.

“The amount of coal displaced by these proposals equates to about 500,000 tonnes each year. Once the changes are fully in place it will mean the equivalent of between 400,000 to 550,000 cars being removed from our roads in a single year,” Megan Woods said.

Also announced today were the successful applicants in round one of the Government Investment in Decarbonising Industry Fund. In total 14 companies will receive $22.88m in co-funding to help their businesses transition away from fossil fuels.

“The decarbonisation fund provides crucial financial support to business and industry to help them switch from boilers run on coal and gas to cleaner electricity and biomass options. This helps create jobs in the clean energy sector, and future-proofs our economy,” said Megan Woods.

“The 14 projects(2) we’re announcing funding for today will achieve up to 10 percent of the gross long lived emission reductions required from the Climate Commission’s first draft carbon budget for the period 2022-2025(1) - the same as taking 49,000 cars off the road,” said Megan Woods.

Minister for the Environment David Parker said both the decarbonisation fund and the coal boiler initiatives were helping reduce emissions in the manufacturing and production sector.

“Fuel used in manufacturing and production – known as process heat – generates about eight per cent of New Zealand’s emissions and is the second largest source of energy-related emissions after transport.

“Decarbonising process heat is one of the biggest opportunities for New Zealand to reduce its domestic energy emissions, and will make a significant contribution to New Zealand’s 2050 net zero carbon target,” said David Parker.

Climate Change Minister James Shaw said with today’s announcement, the Government had taken another necessary step on the road towards a low emissions economy for Aotearoa New Zealand.

“By working with industry to switch from burning coal to clean alternatives we are helping to ensure a better, cleaner future for our children and grandchildren,” James Shaw said.

Two of the companies who have received round one funding are McCain Foods and Woolworks both in Timaru

“McCains and Woolworks(3) are two great examples of businesses that are committed to taking a leadership role on climate change through their uptake of the decarbonisation fund. It’s great to see them embracing clean technology while not compromising on productivity,” Megan Woods said.

The consultation document for the 2037 coal proposals can be found on the Ministry for the Environment website

Notes to editors:

  1. This figure is based on the gross long-lived emissions reductions required in the Commission’s first draft carbon budget period, relative to its current policy reference scenario. Based on the CCC’s data, a total of 4.9 Mt CO2e reductions in gross long-lived gas emissions would be required in 2022-2025 over and above the policy reference scenario. The total emissions reductions expected from GIDI Round 1 projects in this period will range from 0.375 to 0.525 MtCO2e, depending on implementation timeframes – this represents 7.6-10.7% of the required gross long-lived gas emissions reductions. Source:
  2. The full list of approved GIDI projects is:
    Applicant Project Technology Government co-funding Annual carbon abatement (tC02) Lifetime carbon abatement (tC02)
    McCain Foods Timaru Boiler Conversion and Fryer Heat Recovery Biomass Boiler and Fryer heat recovery $2,876,500 33,815 845,375
    Synlait Synlait Boiler Two Biomass Biomass Boiler $611,500 28,500 200,000
    WoolWorks New Zealand Limited Timaru Decarbonisation Project: Electrode boiler, high temperature heat pump, demand reduction Electrode Boiler (Steam) and high temperature heat pump $3,650,000 11,802 267,340
    Westland Dairy Company Limited Demand Reduction Implementation Demand reduction $1,768,800 8,440 168,800
    J S Ewers Glasshouse Heat Demand Reduction and Low Carbon Fuel Switching Shade screens and Biomass Boiler $4,078,000 26,922 673,050
    Napier Pine Napier Pine Wood boiler project replacing 4MW natural gas boiler Wood boiler $995,000 4,165 104,125
    New Zealand Starch Limited Heat recovery of waste steam using a spray condenser Spray condenser $150,000 643 16,075
    AFFCO Malvern SPM Malvern Boiler to heat pump conversion Dual high temperature heat pump $950,000 3,454 69,080
    Alliance Pukeuri Heat Pump Project Heat Pump $1,683,400 9,030 180,600
    Silver Fern Farms Belfast Belfast Hot Water Heat Pump project Heat Pump $795,300 2,974 59,480
    Goodman Fielder Limited Longburn High Temperature Heat Pump project Heat Pump $210,000 1,200 24,000
    Silver Fern Farms Finegand Finegand Heat Recovery and Heat Pumping project Heat Pump $3,027,075 10,503 210,060
    AFFCO Awarua South Pacific Meats Awarua Biogas Project Dual fired (Biogas and LPG) gas hot water boiler $406,083 1,730 34,600
    Alliance Lorneville Energy Optimisation /Electrification Opportunities Heatpump and Electrode Boiler $1,591,300 6,746 134,920
    Total $22,793,000 149,924 2,988,505
  3. Woolworks handles approximately 76 per cent of all wool grown in New Zealand and is the largest wool handler in the world.  McCain Foods processes more than 200,000 tonnes of potatoes and vegetables annually. It has two processing plants in New Zealand with a permanent workforce of more than 300 employees nationwide.


What is process heat?

Process heat is the thermal energy used to manufacture products in industry. Its uses include converting milk into powder, wood pulp into paper, metal production and chemical production (eg, methanol).

  • It generates around 8 per cent of New Zealand’s GHG emissions.
  • It makes up 17 per cent of emissions covered under our 2050 net zero target.
  • It is the second largest source of energy-related emissions after transport (about 27 per cent of energy-related emissions).

Why is the proposed ban and phase out only limited to low and medium temperature coal boilers?

Industries with high-temperature requirements generally use energy in a way that is highly integrated into their plants, meaning there are fewer low carbon opportunities. These types of industries – for example, steel – would be able to use coal provided they are complying with best practice and have a GHG emissions plan in place that demonstrates how they will reduce their emissions over time.

What steps are being taken to help industry move away from using coal-fired boilers?

The three-year $70m Government Investment in Decarbonising Industry Fund (GIDI)  was launched in November 2020 as a partnership between Government and business to accelerate the decarbonisation of industrial process heat and contribute to the COVID-19 recovery by stimulating the domestic economy and supporting employment.

It provides funding to support the adoption of energy efficiency and renewable technologies in industry, with the aim of catalysing adoption of and demonstrating what is possible for industrial heat decarbonisation.

EECA (The Energy Efficiency and Conservation Authority) administers the GIDI Fund on behalf of the Government through a contestable process that will see $69M of capital grants co-investment made available to support good projects.

Round one recipients have been announced today.

For more information, visit: About the Government Investment in Decarbonising Industry (GIDI) Fund | Gen Less