AGL Energy chair Patricia McKenzie has once again put the case for going slow on climate action – and more specifically on the exit from coal – saying there is no “credible pathway” for the gen-tailer to meet science-based targets to curb dangerous global warming at 1.5°C.
The Australian Financial Review reports that McKenzie was due to deliver this message to a company director’s conference on Wednesday – the same day new federal government data puts AGL on top of the list of Australia’s 10 worst greenhouse gas emitters.
The AFR says the chair will tell the newly expanded AGL board – including three members effectively installed there by billionaire activist shareholder Mike Cannon-Brookes – that closing the company’s remaining coal plants any earlier than planned will result in the lights going out.
“AGL was very conscious that our plan must have a realistic delivery route, and simply put, we did not see a credible pathway to a 1.5 degree reduction scenario based on our assessment of both the energy market’s transition requirements and broader economy-wide decarbonisation plans,” McKenzie will reportedly say.
“The energy transition does not come without significant cost, as evidenced by the $1 billion asset write-down which accompanied our strategic plan to accelerate our decarbonisation pathway.
“These differing shareholder priorities needed to be balanced.”
Balancing shareholder priorities has not been AGL’s strong suit over the past 12 months, with agitation from some of the company’s larger stakeholders resulting in failed takeover bids, a scuppered demerger, and a “chaotic” board and management renewal process.
Midway through all this turmoil, AGL in September brought forward the closure date of its Loy Yang A Power Station in Victoria’s Latrobe Valley by 10 years to 2035 and set out a plan to progressively decarbonise its asset portfolio with new renewable and firming capacity.
But this has not been enough to appease Mike Cannon-Brookes, who continues to use the 11.3 per cent stake in AGL held by his family’s private investment vehicle, Grok Ventures to push for a new timeline that actually aligns with Paris targets.
In a letter to AGL shareholders in late October, Cannon-Brookes and Grok urged a vote against the “unambitious decarbonisation targets” proposed on the company’s Remuneration Report, arguing that AGL should align with a more ambitious 1.5 degrees target.
“AGL requires more accelerated decarbonisation ambitions to secure and maintain the market-leading position as Australia’s largest, greenest and most reliable energy retailer, in turn delivering higher shareholder returns,” the letter said.
Cannon-Brookes has long argued that aligning AGL with the science on climate action is the best strategic direction for the company to take, to seize the massive green energy opportunity and to avoid being saddled with costly stranded assets.
AGL just last month posted a massive $1.1 billion loss in the first half of the financial year, driven largely by a big $706 million write down of its fossil fuel assets, significant hedging losses and and reduced operating earnings caused by breakdowns and outages at some of its key coal generating assets.
In a call with analysts following the results announcement, newly appointed CEO Damien Nicks pointed to the companty’s 12GW renewables plans, including a push into “decentralised” assets – including EV charging, home batteries, and “orchestrated” rooftop solar.
But with every push into the future, however reluctant or small, it appears that McKenzie is dutifully wheeled out to put a dampener on market expectations – and to put the fear of god in business, industry and consumers. And the AFR is there to report it.
It’s a tactic adopted by Australia’s fossil fuel lobby more broadly, when renewables messaging appears to be getting the upper hand.
Just this week, with submissions into proposed Safeguard Mechanism reforms winding up and pressure mounting on the Albanese government to set a higher policy bar for industrial and power sector emissions reduction, a spate of articles warning of gas shortages has hit the press.
“Users on edge as plunging production sparks warnings of Victorian gas supply crunch,” reports the ABC, in an article suggesting high gas prices are due to a lack of local supply, rather than a mix of global issues and local market disfunction.
Despite the alarming headline the report later quotes Victorian energy minister Lily D’Ambrosio as saying this is not actually a thing – the state is a net exporter of gas and there are enough supplies available nationally to avert any shortfalls.
Longer term, D’Ambrosio says Victoria will turn to energy efficiency, electrification, hydrogen and bio-methane to cut its dependence on natural gas and drive down emissions.
Other gassy headlines this week have also included two more from the AFR, this time based on comments from former Energy Security Board chair and current board member at AGL, Kerry Schott.
See also: Humiliated ESB reacts badly to its policy rejections, industry wants it shut down
“States hit for ‘demonising’ gas” says one, and “Victoria ‘kidding’ itself if it excludes gas from energy transition,” says another.
But The Australia Institute – which on Wednesday published an open letter calling for no new fossil fuel projects, signed by more than 100 scientists and climate experts – says no one is demonising gas.
“No one is bullying or persecuting the fossil fuel industry,” says the acting director of TAI’s climate and energy program, Polly Hemming.
“Any government policy that is aimed at the phase out of fossils means that our leaders are finally listening to the science.
“There is no plan by any government in Australia to switch off domestic gas supplies overnight and anyone suggesting otherwise is engaging in scare campaigns solely to protect their profits,” Hemming told RenewEconomy.
“Australia is not buying in to the predictable and desperate threats by the fossil fuel industry and its representatives – both in and out of government – anymore.
“Gas and coal are an economic liability in every possible sense. Stronger climate action is an economic opportunity and an inevitability. The answer to energy security is policy that drives rapid investment in renewable energy and storage.”
As the open letter says, below, there are more than 100 new coal and gas projects listed as under development by the federal government, with those scheduled to begin before 2030 – alone – slated to add another 1.4 billion tonnes of emissions a year by 2030.
“This excludes emissions from several major projects and vast new gas basins actively supported by Australian governments,” the letter says.
“Protecting our climate means stopping all new fossil fuel extraction projects,” says Matthew England, ARC Laureate Fellow and UNSW Scientia Professor at the Climate Change Research Centre (CCRC).
“The science is absolutely clear on that.”
