7 Dec 2009

Fonterra tallies cost of revised emissions trading scheme

5:47 am on 7 December 2009

As international climate change negotiations get underway in Copenhagen, the Fonterra dairy co-operative has been calculating what New Zealand's revised emissions trading scheme is going to cost it and how it can cut those costs.

The agricultural sector won't join the ETS until 2015, but Fonterra says it will still face substantial cost increases from July next year from energy and fuel use.

It puts those costs at $79 million in 2013, rising to $115 million in 2015.

Fonterra's sustainable production head John Hutchings says it will be hit harder than many other exporters because dairy processors aren't eligible for the transitional relief measures that the Government's providing for some sectors.

He says the costs of carbon emissions from Fonterra's 26 processing plants throughout New Zealand, as well as the costs of carbon emitted from electricity and fuel use on farms and milk transport will need to be covered by the dairy sector.

Mr Hutchings says that will put Fonterra at a disadvantage with international competitors who don't have to pay carbon emission costs.

He says the company will be trying to contain those costs by continuing to reduce its green house gas emissions.

It has cut energy use per tonne of product by more than a third since 1990, and aims to keeping trimming that by 2% a year.