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“The readiness of the entire energy system to operate without our critical baseload generation will determine whether the earlier, more ambitious targets in the range can be achieved,” the company said.
‘Winds of change’
The viability of AGL’s coal operations have increasingly been in doubt as the rapid rise of cheaper-to-run renewable energy across the country drives daytime wholesale power prices to levels where fossil fuels struggle to compete. Volatile prices across the east-coast energy grid helped push AGL to a $2 billion net loss in the 12 months to June 30.
On Thursday, AGL said it had returned to profit in the half year to December 31, following heavy writedowns. The board declared a first-half dividend of 16¢ per share, down from 41¢ a year earlier.
Chief executive Graeme Hunt described the result as “solid” against the backdrop of reduced demand caused by the COVID-19 pandemic, milder weather and growing uptake of rooftop solar panels.
AGL is Australia’s biggest greenhouse gas emitter, accounting for up to 8 per cent of the nation’s carbon footprint.
As the shift to renewable energy squeezes fossil fuels further out of Australia’s electricity market, AGL last year declared the “winds of change” had swept the sector much faster than anticipated, prompting the company to embark on plans for a historic demerger with a new entity called Accel Energy to own its fleet of large coal- and gas-fired generators. The other, to be called AGL Australia, will hold its electricity, gas and telecommunications retailing business along with some cleaner generation assets.
While coal today makes up more than 60 per cent of Australia’s electricity mix, an international push for developed countries to phase out coal-fired electricity by 2030 has been building.Credit:Nic Walker
AGL had already vowed to shut its Liddell power plant in NSW next year, which will strip out about 5 per cent of the electricity sector’s emissions. However, with other coal-fired generators across the business licensed to run until the late 2040s, the company has faced mounting pressure from green groups and powerful investors alike to commit to vastly stronger emissions cuts.
AGL’s revised closure dates follow a shareholder uprising last year when more than half of AGL’s investors including US investment giants BlackRock and Vanguard defied the board and voted to support an activist climate resolution requesting consideration of new goals that would compel an earlier coal exit than planned.
“Just five months ago, 53 per cent of AGL shareholders supported a motion calling for Paris-aligned targets for both demerged entities,” Mr Gocher said. “The AGL board has manifestly failed to heed that message.”
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While coal today makes up more than 60 per cent of Australia’s electricity mix, an international push for developed countries to phase out coal-fired electricity by 2030 has been building. An agreement endorsed by nearly 200 nations at last year’s COP26 climate summit in Glasgow included for the first time a pledge to begin curtailing coal from the energy mix. United Nations Secretary-General Antonio Guterres described coal as a “deadly addiction, while COP26 president Alok Sharma called on world leaders to “consign coal to history”.
Because electricity production is a dominant source of Australia’s emissions, reducing output from coal plants would help sharply reduce the national carbon footprint.
However, AGL has echoed concerns being voiced across much of the industry that unexpectedly early shutdowns of coal-fired generators could risk causing a “messy” transition, threatening the reliability of the nation’s power market and causing price volatility in the future.
AGL’s update was announced on Thursday as it set new climate goals for both demerged businesses. The company said AGL Australia would also bring forward its target to reach “net-zero” emissions – a pledge to remove as much carbon dioxide from the atmosphere as it releases – by 2040.
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‘Next to meaningless’: AGL brings forward coal power exit by three years
Source: Philippines Alive
