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 the energy transition to a low carbon economy in line with the Paris Agreement. We engage with 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 listed companies of their industry associations’ climate policy advocacy.