AUSTRALIA'S largest domestic consumer of wheat is overhauling its major processing facility and will cut carbon dioxide emissions by 40 per cent as a result.
The Manildra Group will use a Clean Energy Finance Corporation (CEFC) investment of $85 million to transition away from the use of coal at its Nowra plant, which makes wheat gluten, wheat starch, glucose and ethanol.
The company will now use a gas fired cogeneration plant for its energy needs.
Manildra Group managing director John Honan said the deal was a win-win across a range of measurements and would provide the business with a stable, reliable, economic and environmentally-friendly energy source.
"We recognise that stable, reliable, and affordable energy is critical to the site, and with this significant investment we are turning a clean energy advantage into a clean manufacturing advantage," Mr Honan said.
He said the new energy technology meant the company would be able to satisfy all its energy needs from the cogeneration facility.
"With recent developments in Australia's energy transition, this cogeneration technology will produce up to 100 per cent of the electricity required at the Shoalhaven Starches site, support local industries, secure hundreds of direct and indirect jobs, and will create approximately 170 jobs during construction," he said.
CEFC officials also welcomed the move, saying it would help kickstart a move to transition Australia's industrial sector to cleaner energy sources while keeping costs low enough to remain price competitive on the global scale.
The installation of cogeneration technology will reduce emissions at the energy intensive Nowra plant by about 40 per cent, abating an estimated 332,000 tonnes of carbon dioxide or equivalent annually.
CEFC chief executive Ian Learmonth said while decarbonising domestic manufacturing was challenging the technology was out there to do so and Manildra was looking to the future by moving out of coal.
"Domestic manufacturing poses a significant decarbonisation challenge," Mr Learmonth said.
"As the world steps up its focus on emissions reduction, carbon intensive fuel sources are becoming less economic. Manildra Group is a globally competitive, family business that recognizes the financial prudence of long-term investment in lower carbon fuel to power production," he said.
There are several stages to the decarbonisation project.
After installation of the combined heat and power plant the company will actively investigate green hydrogen to power the plant in the future, as well as more conventional renewable energy sources as electrification of industrial steam becomes more economic.
The CEFC investment will finance two behind-the-meter high efficiency gas fired combined heat and power plants.
The new infrastructure will replace the coal fired boilers and the existing gas boilers used to generate steam.
Independent analysis in support of the development approval by engineering consultant GHD estimated the new plant will reduce the emissions intensity per tonne of flour throughput from 0.62 to 0.36t CO2.1
The $190 million project is also financed by a $95 million commercial debt package which is supported by a $50 million guarantee from Export Finance Australia.
In addition, Manildra Group has successfully registered the project with the Clean Energy Regulator to generate Australian Carbon Credit Units.
Construction is due to commence in the next couple of months and the plant is expected to be operational by early 2023.