AGL abandons responsibility on coal closure

The Australasian Centre for Corporate Responsibility​ (ACCR) has criticised AGL Energy’s (ASX:AGL) announcement to split the company in two: “New AGL” which will take the retail business, and “PrimeCo”, which will take most of the generation assets, including AGL’s three coal-fired power stations.

Commenting on the demerger announcement, Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Just seven years after it acquired the last of its coal-fired power stations, AGL is walking away from managing their closure, by spinning them off into PrimeCo, which any responsible investor will surely avoid.

“Following a halving in AGL’s share price over the last year, CEO Brett Redman is attempting to sell the demerger as a win for shareholders, claiming it would give both companies the ‘freedom’ to pursue their own ‘growth agendas’. This is optimistic at best, and delusional at worst.

“The demerger does nothing to reduce emissions, but it may appease some institutional investors who have been demanding AGL do something to reduce its carbon exposure.

“AGL has chosen the easy way out, leaving the hard decisions around coal closure to whoever is chosen to run PrimeCo.

“AGL is Australia’s largest emitter, responsible for approximately 8% of annual emissions. Its actions have a real impact on Australia’s emissions trajectory.

“Nothing in this announcement addresses the need to bring forward the closure of Bayswater and Loy Yang in a transition that protects the health of Hunter Valley and Latrobe Valley communities, respectively, as well as supporting the workers.

“AGL has no plans to encourage electrification and continues to promote the use of fossil gas in order to justify its planned Crib Point gas import terminal. Despite the 2021 AEMO Gas Statement of Opportunities highlighting the flatlining of industrial demand for fossil gas, along with the opportunity to further decrease demand through household electrification, fuel switching and energy efficiency.

“AGL had the opportunity to embrace the energy transition by accelerating its decarbonisation, but it has chosen to spin off its most polluting assets to the detriment of us all.”

Background

ACCR filed a shareholder resolution to AGL Energy in 2020, calling for the early closure of its Bayswater and Loy Yang A coal-fired power stations, which was supported by 20% of shareholders, including the world’s largest asset manager, Blackrock.