AGL mulls investor demands to quit coal in the 2030s

Institutional shareholder Martin Currie said coal plant retirements in the 2040s were “too late” and out of step with the goals of the Paris climate agreement, which aims to limit global heating to as close as possible to 1.5 degrees above pre-industrial levels.

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“Loy Yang A shutting at the end of the 2040s is probably going to get brought forward quite significantly, so we are encouraging them to follow Paris-aligned shutdowns, which would be mid-2030s,” Martin Currie portfolio manager Andrew Chambers said.

The Investor Group on Climate Change, representing large AGL shareholders including BlackRock and Vanguard, said its members had also long been pressuring coal power companies in developed countries like Australia to close by “around” 2035.

AGL on Friday reported its underlying profit had been cut in half amid a turbulent year of volatile wholesale electricity prices and significant breakdowns across its coal-fired generation units. While bottom-line earnings increased to $860 million for the year, AGL’s underlying profit – the figure most closely watched by the market – plunged 58.1 per cent to $225 million.

Shareholders would receive a final dividend of 10¢ a share, the company said, taking total dividends for the year to 26¢.

Tom Allen, an analyst at investment bank UBS, said the underlying result had missed market expectations, while bottom-line profit was at the lower end of the company’s guidance range.

“As expected, AGL did not provide financial year 2023 guidance, but has undertaken to do so upon completing a strategic review at the end of September,” he said.

Hunt said the past 12 months had been “challenging for the company”, and the financial results reflected the “resilience of the business” amid unprecedented market turmoil including soaring fossil fuel costs, volatile wholesale electricity prices and widespread generator outages knocking out supplies.

“We are very well-positioned to navigate ongoing challenges given the large and loyal customer base that we’ve built, our low-cost baseload generation position, which is underpinned by long-term owned and contracted fuel supplies,” he said.

In its official 30-year road-map released this year, the Australian Energy Market Operator (AEMO) assumes that 60 per cent of the east-coast coal fleet would exit the electricity grid within the next decade by 2030, while all of Victoria’s coal-burning power stations were likely to have closed by 2032.

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