By Nick Toscano and Mike Foley
AGL, the largest Australian power company, has pledged to bring forward the closures of its remaining coal-burning power stations in Victoria and New South Wales.
As heavy emitters face intensifying pressure to curtail their use of planet-heating fossil fuels, AGL on Thursday said it would remove coal from its electricity generation mix entirely by 2045 at the latest – three years earlier than previously planned – and possibly by as early as 2040.
AGL’s power plants account for an estimated 8 per cent of Australia’s greenhouse gas emissions.Credit: Paul Jones
The announcement disappointed climate advocates, who have been ramping up demands for the company to exit coal much earlier. The United Nations has called for developed countries to remove coal from their power networks by 2030 in order to avert catastrophic levels of climate change.
Under AGL’s new closure dates, its Bayswater coal plant in NSW, which had been scheduled to retire in 2035, would now shut within a “window” of 2030 to 2033. Its Loy Yang A generator in Victoria’s Latrobe Valley would have its 2048 closure date brought forward to between 2040-2045.
‘Completely unacceptable’
“This is next to meaningless for these crumbling assets,” said Dan Gocher of the Australasian Centre for Corporate Responsibility, a shareholder activist group. “In 2033, Bayswater will be 48-years-old and, in 2045, Loy Yang A will be 61-years-old.”
Conservation groups said letting Loy Yang A continue spewing out greenhouse gases for another 23 years was “completely unacceptable”.
“Pretending the energy transition is going to roll out slowly over several decades helps no one and is a frankly absurd position to take,” Environment Victoria chief Jono La Nauze said. “AGL is still stringing the community along, when workers and the Latrobe Valley community are calling for certainty and realistic timelines.”
Despite the Australian Energy Market Operator (AEMO) last year suggesting the grid could be rid of coal as early as 2032, AGL chief executive Graeme Hunt pointed out those findings were made in a draft report only, and the company did not agree with them “at this point in time”.
“We don’t think it would be in the best interest to pull those plants out earlier than the dates we have given today,” he told The Age and the Herald.
AGL is Australia’s biggest greenhouse gas emitter, accounting for up to 8 per cent of the nation’s carbon footprint.
While removing coal would significantly cut down emissions, the company has echoed concerns across much of the industry that shutting coal-fired generators too soon could risk causing a “messy” energy transition, threatening the reliability and affordability of power.
Mr Hunt said the business would monitor a range of market developments on a yearly basis to determine whether to close the plants at the front or back ends of the closure windows set out on Thursday. Factors to consider would include the amount of new generation being built to replace coal; the availability of on-demand power capacity to support weather-reliant renewables; technological advances in battery technology; and improvements in transmission lines to shift energy from one part of the country to another.
“Not everyone will be happy, whether it’s seen as too much or too little,” Mr Hunt said.
Federal Energy Minister Angus Taylor said closing AGL’s plants early would create a “considerable gap of close to 5000 megawatts of reliable generation”, and called on industry to build timely projects to replace them. “The exit of such a considerable amount of reliable generation is a concern for the continued reliability and affordability of the system,” he said.
‘Winds of change’
The viability of AGL’s coal operations has 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 last year’s heavy writedowns. The board declared a first-half dividend of 16¢ per share, down from 41¢ a year earlier.
AGL, which had already vowed to shut its Liddell power plant in NSW next year, has come under mounting pressure from green groups and powerful investors alike to commit to vastly stronger decarbonisation goals.
Its new closure dates announced on Thursday 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 exit from coal than planned.
Although 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”.
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 entity, to be called AGL Australia, will hold its electricity, gas and telecommunications retailing business along with some cleaner generation assets.
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