AGL split ‘not going to fly’: Cannon-Brookes

Mike Cannon-Brookes has used Labor’s election victory to launch a fresh attack on AGL Energy’s demerger vote.

Mike Cannon-Brookes has launched a fresh attack on AGL Energy. Credit: Zan Wimberley.

AGL Energy has been hit with a fresh attack following Labor’s election victory, with billionaire Mike Cannon-Brookes saying the company’s demerger plan was not aligned with Paris green goals and at odds with a nation wanting stronger climate action.

Over 55 per cent of investors last year voted in favour for AGL, Australia’s biggest polluter, to set short, medium and long-term decarbonisation goals despite it telling shareholders to vote against the resolution.

Mr Cannon-Brookes, AGL’s largest shareholder, is fighting a planned separation of the company into separate retail and generation businesses and wants it to quit coal by 2035 to meet Paris climate accords, a pact to keep temperatures growing less than two degrees from pre-industrial levels with an aim of limiting rises to 1.5 degrees.

“This was an election won and lost on climate. Australians want action and are asking for a stronger stance, as did AGL shareholders who voted for a Paris Agreement aligned future last year,” Mr Cannon-Brookes said on Sunday.

“The AGL board should pay attention to its shareholders and the mood of the country. A demerger plan that is not aligned to Paris targets is not going to fly. [Saturday] night’s vote suggests Australia has its sights set on a brighter future and the opportunities that decarbonisation will bring. AGL should not be left behind.”

A top 10 shareholder in AGL Energy, Aware Super, has said it is still weighing support for a controversial demerger of the company, naming climate change as one issue that could swing its vote.

While both major parties have a net zero emissions by 2050 goal, Labor plans to lower Australia’s emissions by 43 per cent of 2005 levels by 2030 compared with the Coalition’s 26 to 28 per cent goal.

AGL immediately struck back, saying that it shared the ambition for “decisive action on climate” while ensuring affordable energy and would work with the Albanese government to achieve the twin goals.

“The demerger represents decisive action towards decarbonisation and will enable AGL Australia and Accel Energy to responsibly accelerate the decarbonisation of Australia’s energy system, faster than could have been achieved as one company,” chief executive Graeme Hunt said.

The power giant plans to split off AGL Australia, with its 4.5 million customer base, into a newly listed retail-focused company with the current AGL to be rebadged as a coal-dominated generator called Accel Energy.

The split needs approval from 75 per cent of shares voted to proceed with a demerger meeting set for June 15.

The tech titan on Friday laid out a vision for reinventing AGL if he successfully defeats a company demerger, switching off coal by 2035 and offering households green loans to become 100 per cent renewable, sparking a savage backlash from the power giant.

However, Mr Hunt continues to argue for a measured transition. Coal provides up to 60 per cent of electricity for the grid currently and AGL has been concerned the premature retirement of coal without adequate back-up in place could lead to worse reliability or higher prices.

“Australia’s energy transition needs to be seen in the context of how Australia and the energy system as a whole transitions to net zero, and from there, what the contributions of any individual company should be,” Mr Hunt said.

“We have brought forward our coal closure dates and have committed to reviewing and reporting on system readiness every year to see if we can move them further forward.”