AGL is aiming to complete its exit from coal-fired generation by the end of financial year 2035 and accelerate its transition to an integrated low carbon energy leader.
AGL’s annual greenhouse gas emissions are expected to reduce from 40 million tonnes to Net Zero on achieving targeted closure, supporting the transition to a lower carbon world aligned with the Paris Agreement goals and achieving net zero for operated Scope 1 and 2 emissions after coal closures.
AGL aims to progressively decarbonise its asset portfolio with new renewable and firming capacity, with an ambition to supply its customer demand with up to 12 GW of new generation and firming capacity, requiring a total investment of up to $20 billion, in place before 2036, funded from a combination of assets on AGL’s balance sheet, offtakes and via partnerships.
This includes an interim target to have up to 5 GW of new renewables and firming in place by 2030.
AGL chair Patricia McKenzie said AGL’s decarbonisation and energy investment strategy sets a clear pathway for the company’s future and its leading role in Australia’s energy transition.
McKenzie said: “We have listened to our stakeholders – in particular, our shareholders, as well as government and energy regulatory authorities. Their views were an important consideration as we reviewed the company’s strategic direction after withdrawing the demerger proposal.”
“Our purpose in undertaking the review was to consider options for AGL’s future as a strong integrated entity in a way that enhances long-term shareholder value, and to achieve this in a complex energy environment, with increasing pressure to accelerate the pace of decarbonisation while maintaining energy affordability.”
“AGL is committing to an ambitious but achievable strategy to deliver a responsible and accelerated low carbon future. We are aiming to reshape our energy portfolio into a cleaner and more flexible one, transitioning away from coal and focusing on new renewable and firming capacity.”
“This represents one of the most significant decarbonisation initiatives in Australia. It supports the transition to a lower carbon world aligned with the Paris Agreement goals. AGL will be Net Zero for operated Scope 1 and Scope 2 emissions following the closure of all AGL’s coal-fired power stations.”
AGL incoming interim chief executive officer Damien Nicks said: “AGL’s targeted accelerated closure of Loy Yang A power station by the end of FY35 represents a major step forward in Australia’s decarbonisation journey, supporting the transition to a lower carbon world aligned with the Paris Agreement goals.
“The targeted earlier closure of Loy Yang A Power Station will avoid up to 200 million tonnes of greenhouse gases being emitted compared to the previous Loy Yang A Power Station closure date.”
In response to AGL’s announcement that it will close the Loy Yang A power station by 2035, Environment Victoria’s Policy and Advocacy Manager Bronya Lipski said: “[This] announcement is a positive step for AGL, but it falls short of the Paris climate targets to keep us below 1.5 degrees of warming – targets that AGL shareholders demanded in an unprecedented vote at last year’s AGM.”
“This timeline doesn’t meet the expectations of AGL shareholders who voted last year to demand the company adopt Paris-aligned climate targets.
“AGL needs to explain why it continues to resist the wishes of not only its shareholders but most Australians who want urgent action on climate.
“Announcing timelines inconsistent with the Paris agreement and the wishes of its shareholders only prolongs uncertainty for the Latrobe Valley community as inevitably these will come forward.
“2035 is an improvement but it is still not credible.
“According to analysis using data from the Australian Energy Market Operator’s (AEMO) Step Change Scenario – all coal in Victoria should close by 2032.
“So AGL’s prediction not only fails to commit to a target consistent with the Paris targets, but it also fails to meet the expectations of Australia’s own impartial energy market operator.
“As more coal-burning power stations reach the end of their lifespan, it is crucial workers and the broader Latrobe Valley community be acknowledged and respected for their contribution of powering our state for the last century.”
“The Latrobe Valley can continue to play this role with a comprehensive renewable energy transition that is already underway.
“The Latrobe Valley community have been calling out for an honest transition plan for many years now – a staged transition that will provide local people certainty to plan their future in a region that is integrated into a regional just transition plan.
“A vital part of transition is the monumental task of mine rehabilitation and ensuring that it is done to the highest standards without causing further adverse impacts on the environment and the local community.
“The community needs as much certainty around mine rehabilitation as they do around the closure dates of these power stations.
“The Victorian government has already made significant progress in transitioning the Latrobe Valley towards becoming a booming renewable energy zone with its planned 9-gigawatt offshore wind farm that will establish an entirely new clean energy sector in Gippsland.
“They must now work with the Latrobe Valley community to develop a responsible and comprehensive transition plan to ensure the community is properly looked after so it can continue to thrive beyond coal,” she said.
Latrobe Valley long time coal worker Tony Wolfe said the announcement confirms the accelerating move away from coal in Australia.
“The workforce and community are now left with no other option than to rally together and embrace the new technology if we want to continue our proud history of electricity generation for Victoria in the Latrobe Valley.
“This is not a time for push back or negativity.
“There is so much to be done to ensure adequate mine rehabilitation is planned, new jobs are identified, skills upgraded, and an entirely new workforce is mobilised to roll out the renewable projects in planning within our region,” he said.
