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AGL catches up to peers with climate plan

Under Australian company AGL Energy’s first climate transition plan, closing one coal-fired power station a decade early will avoid 200 million tonnes of greenhouse gases.

September 29, 2022
By Marion Rae
29 September 2022

Australia’s biggest greenhouse gas emitter AGL Energy has released its first climate action plan as it fast-tracks the closure of one of its coal-fired power stations.

AGL says it has been at the forefront of energy innovation in Australia for 185 years, from lighting the first gas street lamp in Sydney in 1841 to becoming the nation’s largest private investor in renewable energy.

But Australia’s largest electricity generator has faced a shareholder revolt led by billionaire Mike Cannon-Brookes for going too slow in exiting coal and gas, before mapping out a new future in a strategic review and climate transition action plan released on Thursday.

The Loy Yang power plants. The closure of Loy Yang A has been brought forward to 2035. (Asanka Ratnayake/Getty)

The closure of Loy Yang A power station has been brought forward by a decade to 2035, which AGL said would avoid up to 200 million tonnes of greenhouse gases being emitted compared to previous timelines.

The closure of Victoria’s ageing coal-fired plant, which provides almost a third of the state’s electricity when not suffering outages, is the biggest contributor to the climate plan that shareholders will vote on in November.

Another new milestone is an interim target of five gigawatts of renewables running by 2030, up from the 3.2GW already in the pipeline, and topping Origin Energy’s 2030 commitment of 4GW.

All coal-fired electricity generation will cease by 2035, with the exit of the NSW Bayswater plant in the Upper Hunter Valley still on for 2033 and Liddell already scheduled to shut next year and be replaced by a big battery.

AGL pledges to be “net zero” from operations when all AGL’s coal-fired power stations are closed by 2035.

“We’re going to have to work very, very closely with state and federal governments over the coming years to transition our workforce to reskill,” AGL’s interim CEO Damien Nicks said on a conference call.

“And hopefully as we transition the sites, we can utilise as much of that workforce as we possibly can with those new technologies.” 

Next year’s closure of Liddell will be the first site to be rehabilitated, and that “template” would be rolled out to other assets, working closely with communities.

Atlassian co-founder Mike Cannon-Brookes. (Kevin Dietsch/Getty)

The move to more solar, wind and big batteries will require a total investment of up to $20 billion before 2036, which investors would be more willing to back under the new approach, Nicks said.

Cannon-Brookes’ Grok Ventures investment firm said there was still a lot of detail to come.

As the leading energy company in Australia and largest emitter, AGL needs to assume a leadership position on the Paris goal of keeping global warming below 1.5 degrees, a Grok spokesman said.

“On first appearance, it doesn’t seem to align with Paris, which AGL’s own shareholders voted for at last year’s AGM,” he said.

AGL interim CEO Damien Nicks. (AGL Photo)

AGL’s accelerated plan for net zero emissions follows other major climate announcements for ASX-listed companies, with BHP and South32 abandoning the Mt Arthur and Dendrobium coal mine extensions.

Origin has fast-tracked the closure of Eraring – Australia’s biggest coal-fired power plant – at Lake Macquarie in NSW and this month offloaded its stake in developing the gas-rich Beetaloo Basin.

“These significant developments were born from years of community and shareholder pressure,” Australasian Centre for Corporate Responsibility (ACCR) climate lead Harriet Kater said.

“And is evidence that active engagement strategies, pursued by major shareholders, can have material emissions outcomes in the real world,” she said. 

‘Lacks credibility’

Advocacy group Environment Victoria says 2035 is “an improvement but it is still not credible” and falls short of a plan aligned to the Paris climate targets that AGL shareholders demanded last year.

David Ritter, CEO at Greenpeace Australia Pacific, said AGL had been a “corporate muppet-show ignoring obvious trends in the sector”.

The clean energy transition in Australia requires closing the Loy Yang plant in 2030, shutting the Bayswater coal-burning power station by the same date and helping households switch off toxic gas, he said.

Liddell in NSW was already scheduled to close by next year and the Upper Hunter Valley’s Bayswater by 2030-33, so the fast-tracking strategy only applies to Loy Yang.

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