AGL implodes as switch from coal to green energy gathers pace
AGL Energy is in crisis mode after dumping a demerger, its CEO and chairman following a successful campaign by Mike Cannon-Brookes against the company split.
Australia’s biggest polluter, AGL Energy, faces mounting pressure to close its coal plants sooner to accelerate a move to green power after billionaire Mike Cannon-Brookes forced it to abandon a demerger, triggering the dramatic departure of the company’s top bosses.
The 180-year-old power operator suffered a humiliating defeat at the hands of Australia’s most high-profile climate activist. Mr Cannon-Brookes will now consider joining the company’s board to ensure it launches a decarbonisation plan that meets international environmental goals.
“There’s a huge movement towards climate and going green in Australia,” Mr Cannon-Brookes said on Monday.
“Last week’s election was clearly a massive stand for that.
“And all of these things are happening in sequence. It’s part of a broad change, which people want to be part of.”
The capitulation sparked anger among some AGL staff in briefings on Monday, with one employee asking whether the company regretted not having a plan B given the risk of the demerger failing.
Chief executive Graeme Hunt told one staff meeting AGL would have easily won the shareholder vote if Mr Cannon-Brookes had not emerged.
After two takeover bids were rejected by AGL, Mr Cannon-Brookes used his considerable wealth to build up an 11.3 per cent stake in the power giant and ran a high-profile “Keep It Together” campaign to foil a vote on the demerger set for June 15.
AGL’s largest shareholder fought a planned separation of the company into separate retail and generation businesses, saying it would destroy shareholder value.
Instead, he wants it to switch off coal by 2035 to meet Paris environmental accords, a pact to keep temperatures growing less than 2C from pre-industrial levels, and work with the company on appointing an independent chair better equipped to deal with accelerated action on climate. “Wow. A huge day for Australia,” the Atlassian co-founder tweeted. “Lots of work but we CAN do this.”
Half the board will depart, including Mr Hunt and chairman Peter Botten. “The company needs a fresh direction and clearly needs board members, leadership and talent who can understand the opportunities. And it now needs to go and grab them,” Mr Cannon-Brookes said.
While quitting coal early would cut its emissions, there are fears that betting on a wholesale move to renewables could disrupt the power grid at a time when households face big hikes in their electricity bills.
With federal Labor setting a goal of boosting the share of renewables in the national electricity market to 82 per cent by 2030, nearly triple current levels, Victorian Energy Minister Lily D’Ambrosio said states were already acting on replacing coal.
“Victoria has been insulated against those very, very high prices that we’re seeing in other states because we’ve got a really healthy supply of renewable energy that’s in the market that’s produced at very small cost,” Ms D’Ambrosio told The Australian.
The failure of the AGL demerger had made an earlier exit from coal for the company more likely, according to Grattan Institute energy program director Tony Wood, which would make meeting Labor’s 43 per cent emissions reduction target by 2030 easier.
But Mr Wood warned a failure of federal policy over the past decade or more had also increased the risk of a disorderly transition away from fossil fuel-based power.
“It’s not whether you can shut down the coal power generation – they are going to shut down eventually. The question is whether we are building all the kit to ensure the system remains stable and reliable when they do,” Mr Wood said. “Chris Bowen’s top priority is to get on top of this.”
Mr Wood said Labor’s $20bn Rewiring the Nation Fund had the potential to provide cheap funding to modernise the grid. With fossil fuel companies struggling to attract investors, and the decarbonisation pathway far from certain, he said: “The only way this is going to work is if (the Albanese government) are going to put in place the needed policies that create the confidence in renewable projects and getting them connected to the grid.”
