How NZ uses coal


More than 80% of domestic industrial coal consumption goes into steel, dairy, wool and leather, cement and lime-making, hothouse horticulture, and wood processing. The flow-on economic impact of these industries for New Zealand runs into many billions of dollars a year, including construction, roading, and renewable electricity generation and other infrastructure.

To break down this figure with two examples:

  • One New Zealand meat processor used 9500 tonnes of sub-bituminous and bituminous coal valued at $860,000 to produce $320 million worth of meat products
  • A dairy company used 12,000 tonnes of bituminous coal, valued at $840,000, to produce $180 million worth of dairy products

Coal has long been used by New Zealand industry, in particular, in the South Island, because it is practical to use, accessible and cost-effective. As a rule of thumb, electricity is approximately three times the price of coal per unit of heat produced, with biomass or wood waste close to that figure, and diesel is twice the price of coal. (Source: CRL Energy).

In the North Island, where there is gas available for industry, gas is price competitive with coal, increasingly so, as the carbon price continues to rise.

Lower-carbon energy options such as wood chip and wood pellet boilers are becoming increasingly available, and these are making some inroads into current coal users, for example, greenhouse growers, and schools where these are located near sources of biomass. Fonterra is trialling biomass to reduce its dependence on coal.

Read more about the challenges and opportunities with biomass here.

In the South Island, many other types of institution use coal as a source of heat, among them, hospitals, universities, offices, hotels, swimming pools, laundries, museums.

As to the residential use of coal in New Zealand for heating, this is a minor proportion of total domestic consumption, and in parts of New Zealand is being phased out, for air quality reasons.