Dairy giant Fonterra believes its latest initiative to cut carbon emissions could make the difference of the equivalent of taking 18,500 cars off the road.

The co-operative's Te Awamutu site has just completed a trial to run its existing coal boiler exclusively on wood pellets.

Fonterra COO for global operations, Robert Spurway told Rural Exchange's Dominic George that moving to wood pellets would help in seriously reducing carbon emissions and move the co-op closer to hitting its climate change targets.

"The trial showed there are a few kinks to be ironed out. For example, we'll need to figure out how to keep the wood pellets dry," he said.

"But right now, it's looking like we can reduce our carbon emissions by around 84,000 tonnes per year," said Spurway.

"That is the equivalent of taking 18,500 cars off the road."