AGL on a collision course with Paris targets and investors
, by Dan Gocher
Sydney, 5 August 2020: The Australasian Centre for Corporate Responsibility (ACCR) has filed a Shareholder Resolution to AGL Energy Ltd (ASX:AGL), requesting the company bring forward the closure dates of its Bayswater and Loy Yang A coal-fired power stations.
This resolution is based on AGL’s own FY2020 scenario analysis which shows that in order to limit global warming to 1.5°C above pre-industrial levels, AGL would have to close its three remaining coal-fired power stations by approximately 2036 - as opposed to the scheduled closure of Loy Yang in 2048, announced in 2015.
Commenting on the resolution, Dan Gocher, Director of Climate and Environment, said:
“Prudent capital allocation is a fiduciary responsibility of AGL to its investors. ‘Sustaining’ capital expenditure has grown from 25% of total capital expenditure in FY2013 to 72% (estimated) in FY2020. This allocation of capital expenditure suggests AGL is maintaining its coal-fired power stations at the expense of accelerating its transition.
“Investors must question whether this expenditure is in the long-term interests of shareholders.
“Despite issuing a Climate Statement at the end of June 2020, AGL continues to evade any substantive commitment to reduce emissions - and most importantly failing to bring forward the closure of coal-fired power stations, which investors have long been asking of AGL.
“AGL continues to affirm its commitment to Paris targets despite planning to operate its coal-fired power stations until the end of their technical lives.
“AGL’s emissions are not a matter to be taken lightly - they make up 8.1% of Australia’s total emissions.
“These coal stations are fossils in their own right - and as they age, their reliability declines and the cost of maintenance increases.
AGL Energy's Capital Expenditure, 2013-20
Capital expenditure AU$m
Growth and transformation
Source: AGL Energy Annual and Half-Year Reports, 2013-20
AGM 2019 - “The Paris accord is an agreement between countries, not an agreement that binds companies”
Standing firm on the Paris Agreement (2017) - “Our plan is consistent with the best available science on climate change mitigation, and in particular Australia's international obligations under the Paris Agreement.”
Carbon Constrained Future (2016) - “AGL accepts the Intergovernmental Panel on Climate Change (IPCC) conclusion that: warming of the climate is unequivocal; anthropogenic greenhouse gas emissions are extremely likely to be the cause; and that the risks associated with climate change are reduced substantially if warming is limited to less than 2 degrees Celsius above pre-industrial levels.”
ACCR’s climate program aims to accelerate Australia’s transition to a low carbon economy in line with the Paris Agreement. We engage with ASX-listed companies on their climate risk disclosure and the need to set emissions reduction targets consistent with the Paris Agreement, and we also push for reviews by ASX-listed companies of their industry associations’ climate policy advocacy.