Origin Energy CEO Frank Calabria boosts climate goals amid investor pressure

Origin Energy has boosted its climate ambitions and included a new goal covering Scope 3 emissions of its customers for the first time.

Origin Energy's Eraring coal power station will close in mid-2025, seven years earlier than planned as the power giant boosts its climate ambitions.

Origin Energy has laid out a string of new climate goals including a long-term ambition to be net zero in Scope 1, 2 and 3 emissions by 2050, but has faced criticism from green groups for not including its Beetaloo gas project in the targets.

The electricity and gas giant set a medium-term target to reduce Scope 1, 2 and 3 equity emissions intensity by 40 per cent by 2030, from a FY2019 baseline and said the two goals are in line with the Paris agreement, which includes a pact to keep temperatures growing less than two degrees from pre-industrial levels with an aim of limiting rises to 1.5 degrees.

Origin is a major gas producer through its stake in the Australia Pacific LNG export plant in Queensland. It’s also looking to develop vast gas resources in the Northern Territory’s Beetaloo Basin but said the project had not been included in the target.

“This is because there has been no decision, nor are we close to a decision, to produce those gas resources. However, any development that may be pursued in the future would only occur where it was consistent with our ambition to be net zero emissions by 2050,” Origin said.

Its decision to carve out the Beetaloo was savaged by green groups.

“The decision to exclude the significant new Beetaloo, Canning and Cooper-Eromanga gas basins from its medium term targets means the company is ignoring major potential emission sources,” the Australasian Centre for Corporate Responsibility’s climate lead Harriet Kater said.

“Origin enthusiastically promotes the massive resource potential of these gas basins to justify capex spending, yet falls silent when it comes to admitting the greenhouse pollution impacts.”

Investors have been pushing big polluters to boost their ambition amid fears over missing climate change goals and concerns on so-called ‘greenwashing’ where companies exaggerate their environmental credentials.

Origin’s medium-term plan aims to reduce absolute Scope 1, 2 and 3 equity emissions by 20 million tonnes by 2030, from a 2019 baseline.

A new short-term target to reduce Scope 1 equity emissions by a cumulative 8 million tonnes between 2021 and 2023 against a 2017 baseline will be linked to remuneration.

Eliminating Scope 3 emissions of its APLNG customers was a tougher, long-term goal according to Origin boss Frank Calabria.

“We would need to really work through our customers objectives as well. We see the world moving towards decarbonisation, but you would need to convert that into the detail of how they will tackle their own decarbonisation path and then we would need to make decisions in conjunction with them or alongside them.”

Origin’s first climate transition action plan will be submitted to a non-binding, advisory only shareholder vote at its annual general meeting on October 19.

“We believe our climate plan is appropriately ambitious, and that our medium-term emissions intensity target and long-term net zero emissions ambition are consistent with the goals of the Paris agreement, therefore, we encourage shareholders to support it,” Mr Calabria said.

The power giant copped several large votes at last year’s AGM from shareholders supporting resolutions on climate change.

Aligning capital expenditure with a 1.5 degree pathway was supported by nearly 44 per cent of shareholders while 36 per cent of investors backed a resolution calling on the company to suspend its membership of industry associations whose advocacy is inconsistent with the Paris Agreement.

Origin owns Australia’s largest coal power station at Eraring in NSW’s Hunter Valley and may close the plant by mid-2025, seven years earlier than its planned retirement date of 2032.

It said gas remains an integral part of the energy mix through the transition with global demand for the fossil fuel soaring so far this year amid growing energy security concerns following Russia’s invasion of Ukraine.

“Our view is that gas will continue to play an important role in the energy mix for some time, to support variable renewable energy output and for customers who cannot easily electrify and for which there is no viable alternative to gas available today,” Mr Calabria said.

Origin shares rose 0.2 per cent on Friday to $6.35.