Activist shareholders in the energy sector continue to apply pressure on companies like AGL to rapidly transition and de-carbonise in line with the Paris Agreement. AGL has been actively planning for a low carbon economy, however the speed of this transition in light of the Paris Agreement remains a matter of debate amongst its shareholders.
For companies like AGL, the transition to a low carbon economy creates a dilemma. Rapid decarbonisation could result in past fossil fuel investments being written off, with associated loss of income. However, failure to transition to renewables could itself lead to stranded assets and brings the potential for shareholder litigation, particularly if the wider market continues to trend towards renewables.
Data from Australian scientific research and energy regulators indicate the cost of new build renewable projects is now cheaper per MwH than new build coal plants. As such, the economic costs of transitioning are shifting. Likewise, the regulatory risks of obtaining project approval for fossil fuels projects are increasing, as highlighted by the recent refusal of planning approval for a coal mine by the Land and Environment Court of NSW in Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7.
AGL Energy is facing a revival of investor and activist pressure to bring forward the planned closure of its coal power plants, with the filing of a shareholder resolution urging it to align the schedule with the goals of the Paris climate accord... A new analysis ... found that AGL needed to close the last of its four units at Bayswater by 2028 and the last of the four units at Loy Yang A by 2032 to be better aligned with the Paris accord.... [and] that it would be cheaper for AGL to build new utility-scale solar capacity or onshore wind than to operate existing coal plants by 2026, "meaning that continuing to operate existing coal plants is likely a high-cost and therefore an increasingly high-risk option".
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