AGL Energy to allow customers to fully offset emissions for $1/week

AGL Energy says it will introduce a new program on July 1 that will allow all its electricity customers to fully offset their greenhouse emissions for just $1 a week.

The proposal was announced by managing director Andrew Vesey at the 3rd Emissions Reduction Summit in Melbourne on Tuesday.

“As of July 1, all electricity customers can totally offset the carbon associated with their electric consumption for $1 a week … with high quality, verifiable Australian domestic products and credits,” Vesey said.

It is believed to be the first time that a major Australian energy retailer has offered such a package for consumers, although most, including AGL Energy, have offered a varying scale of “green products” to at least notionally increase the amount of renewable energy consumed.

AGL has 3.7 million customers, but they have some of the highest emissions per unit of energy due to being the biggest owner of coal-fired generators in Australia, although AGL is also the biggest producer of renewable energy in the country.

Vesey said the $1 a week charge would cover the cost of the carbon offsets and the transaction costs, but would not deliver profits. He said it would be about 30 per cent cheaper than “green power” programs. It would be simpler and cheaper.

He declined to specify exactly what sort of offsets the company would contract with, but said “we know the type of investments we are looking for.”

The uptake of “green power” programs in Australia has been relatively poor, and Vesey said such programs had “credibility” problems.

“We have to make (this new program) easy, convenient … and low cost. We know the type of offsets that the customer wants. We want to get to the point where you can click on your (iPhone) App to make it easy.”

Vesey said such incremental steps were “critically important” in the transition to a zero carbon future, although he said that with the right policies, that transformation can happen “almost overnight.”

AGL has previously announced that it would not extend the life of its existing coal plants, and Vesey reiterated today that no new coal plants would be built or financed.

“We have said we are getting out of the CO2 emissions business, but not the coal business. Right now, it looks like the same thing,” he said.

AGL, he noted, was the largest generator of renewable energy is Australia, with capacity of more than 1,700MW, mostly in wind farms and newly built solar farms.

However, it is also the largest owner of coal-fired generators, with the Loy Yang brown coal generator in Victoria and two large black coal generators in NSW.

Vesey reiterated that it was critical that excess coal capacity was removed. There is currently 7,000MW of excess coal capacity and, with another 5,000MW of renewable energy to be built by 2020, the fall in wholesale prices would stop private capital from entering the market.

He called for a program to close the dirtiest power stations, a move away from “energy only markets” (AGL wants capacity markets to be introduced), and moves to stop networks from entering the household solar and storage market.