State-owned coal company Solid Energy is pulling out of the home-heating market, amid growing fears that its continued use in polluting open fires is harming efforts to improve coal's reputation.
Of the company's 4.09 million tonnes of coal sold in the year to June, 1.96 tonnes weresold in New Zealand, and the rest was exported.
But only about 4 per cent of the coal sold at home went to the home heating market. The rest was used mostly at the Glenbrook steel mill and to generate electricity in the Huntly power station.
In a speech given in Nelson this week, chief executive Don Elder said inefficient domestic coal and wood burning was bad for the environment and hurt the coal industry's image.
Solid Energy aimed to stop selling coal in this market within two years.
Its sales account for about half the fuel used in New Zealand home heating market.
He would not say how much the domestic coal market was worth to Solid Energy, but said it had a high profit margin.
A 4 per cent share of sales would give Solid Energy $12.7 million a year from the home heating market.
The company accepts that other, smaller coal suppliers are likely to step into the gap, but it believes the home heating market is shrinking.
Air-quality rules are being tightened in many areas.
In Christchurch, open fires will be banned from 2007.
Elder and Solid Energy are trying to promote coal as the perfect fuel for new power stations.
New Zealand has enough coal to last for hundreds of years, but one of the biggest problems with using it to fuel power stations is that it emits high levels of the greenhouse gas carbon dioxide.
Solid Energy is worried that the image of smoggy mornings caused by coal burned in home fires will harm its chances of getting community support for increased use of coal in industry and for power generation.
Last year, it started selling fuel pellets made from waste wood and sawdust, designed to be burned in home fires and log burners. Announcing the move into the pellet business last year, Elder said it "underlines the company's recognition that burning solid fuels - wood and coal - on domestic open fires is unacceptable in cities that suffer from poor air quality".
