AGL pushes back on coal power plant closures
AGL rejects an activist push to hasten the closure of its coal power plants to meet Paris deadline.
AGL Energy has rejected an activist push to bring forward the planned closure of its coal power plants but has committed to carrying out new analysis to assess how climate targets may impact its eventual coal exit plans.
At its annual general meeting in Sydney, Australia’s largest coal plant operator opposed a resolution by shareholder activist group Market Forces which called for the company to quit the fossil fuel by 2030, in line with the Paris climate accord.
The shareholder action would have required AGL to amend its constitution. The move was not supported by the company’s board, which said a transition away from the fossil fuel must be done in an orderly manner.
“I do want to assure shareholders that the two key issues that are the subject of the resolutions, being climate change and emissions from our operations, are a key focus for the board. We understand that these matters are of concern to our shareholders and they are matters that the board takes very seriously,” AGL chairman Graeme Hunt said.
“However, the board believes it’s important that any transition of the energy sector takes place in an orderly manner.”
However, AGL will now carry out work determining the impact on its generation fleet from the Paris agreement.
“During FY20 we intend to undertake further analysis to understand the impacts on AGL’s portfolio and closure plans under scenarios that limit warming to below 1.5 degrees above pre-industrial levels,” Mr Hunt said.
AGL, the nation’s biggest carbon polluter, is scheduled to shut its Liddell coal station in early 2023. But its Bayswater unit will remain in operation until 2035, while Loy Yang A is due to run until 2048.
Major Australian corporates and banks are facing growing pressure from institutional investors, activist funds and green groups to cut their direct emissions and also extend oversight over the extent to which their end customers may also be contributing to climate change.
Market Forces said in a statement that AGL would face a major investor backlash after rejecting the shareholder resolution calling for emissions cuts in line with the Paris agreement.
AGL has signalled a steep profit fall of up to 25 per cent in the 2020 financial year, to a range between $780 million and $860m, guidance which it reiterated on Thursday. The $820m midpoint of the guidance was some 10 per cent below the consensus estimate of $908m.
The power giant is facing lower wholesale power prices and also needs to reprice new gas deals at higher costs than its legacy contracts.
The Sydney-based power giant also said it remained on the hunt for opportunities in the broadband and data sector after pulling its $3 billion takeover of Vocus following due diligence.
“While it is important for AGL to invest in growth to secure future value creation, just as we have done successfully in the past, maintenance of financial discipline and appropriate capital allocation is especially pertinent with interest rates at current lows,” Mr Hunt said.
AGL is considering investments in the $250m Crib Point LNG import terminal in Victoria, the Kanmantoo and Bells Mountain pumped hydro schemes and a 250MW gas power station at Newcastle.