The Australian Government has given Fonterra nearly $700,000 to help make its cheese production factory in Tasmania more environmentally friendly.
The dairy co-operative will also spend more than $6 million of its own money installing eight new cheese vats at the plant in Wynyard which it says will reduce carbon emissions at the plant and improve efficiency.
Greenpeace says Fonterra's move towards gas in Australia, where there's a general reluctance to move away from coal, is a good one.
Greenpeace climate change spokesperson Simon Boxer says Fonterra's move shows just how effective Australia's carbon tax is - sending price signals to corporations which encourage change.
He says Fonterra experimented with reducing its carbon footprint in New Zealand too by trialling wood biomass to fuel its normally coal-fired Clandeboye plant in Timaru, but seemed to lose interest.
Mr Boxer says Fonterra stated the reason it was investigating wood biomass was because of the charge that was coming through New Zealand's emissions trading scheme (ETS).
But he says the current government has decided to weaken the ETS to the point that the price of carbon is not a factor that Fonterra is focussed on.
Mr Boxer says it would make sense for Fonterra to take the lead in implementing renewable energy technologies as New Zealand exports dairy products to many markets where the carbon footprint is a key issue.
Fonterra estimates Australia's carbon tax will cost the average dairy farm $3000 a year in increased electricity costs.
In 2011, it ran a pilot programme for its Australian farmers to identify simple changes they could make in the dairy shed to reduce their electricity usage.
Fonterra says these changes saved the average farmer $2000 a year - and without any significant investment on their part.
