AUSTRALIA

AGL votes down climate change action bid

SHAREHOLDERS in AGL Energy have rejected a call by activist shareholders to force AGL to recognise the risks inherent in climate change, and state annually what it was doing to face them.

AGL votes down climate change action bid

Around 120 shareholders in AGL Energy requisitioned the resolution requiring the company to change its constitution to consider global warning, and not simply avarice and any fealty to Mammon.

In the end just 17.9 million shares backed the vote, while 326 million shares rebuffed the green overture in favour of maximising profit.

The total shares voted represented just under half AGL's shares on issue.

Speaking at AGL's annual general meeting yesterday, chairman Jerry Maycock said AGL - Australia's largest emitter - was committed to greener energy, but he said there were ramifications of AGL's change in generation mix over the decades that needed to be carefully considered if the company was to remain viable.

"Those of you who have owned AGL shares for some time will recall that during the last decade AGL has been the largest private sector developer of large-scale renewable energy projects in Australia," Maycock said.

"Mainly this has been in the form of wind-powered generators, although more recently we have also built two very large solar farms in western New South Wales. One of these - at Nyngan - is already operational.

"The other - at Broken Hill - is due to be commissioned soon. However, the rate at which we have committed to further investments of this type has slowed dramatically, in line with other investors, as political uncertainty surrounding the Federal renewable target became acute."

And he said the purchase of a number of coal-fired baseload plants in Victoria and NSW had changed AGL's energy mix and increased its carbon pollution issues.

AGL was named Australia's worst polluter in a report in March by the Australian Conservation Foundation, but Maycock said the plants had established AGL as the largest generator in the National Electricity Market, with the lowest costs in Australia's two biggest states, and the plants were producing significant profits and cash flow.

He admitted shareholders and others wanted to know how AGL could rationalise its much higher CO2 emission profit and its renewable generation position, and how it could reconcile it with societal expectations that action needed to be taken to deal with the link between carbon dioxide emissions and potential climate change.

Maycock said it was a complex topic.

AGL recognises the company needed to move away from fossil fuels. It has pledged not to construct any future coal fired plants, and it will not extend their lives further, but he said AGL could not go it alone.

He said the Commonwealth needed to establish a coherent national plan to decarbonise Australia's power generation.

To decarbonise will take decades, Maycock said, to avoid "immense and unaffordable cost impacts on Australian consumers and the economy".

That seems at odds with scientific studies that have warned the global economy needs to substantially decarbonise within the next decade to reduce the risk of disastrous climate change and the economic and health impacts of global warming.

AGL says it will take the profits from the coal-fired power stations to invest in renewable assets, and when the investment climate improves it will fund investment in new digital technology and the energy storage products which will soon become a more significant feature in many Australian households.

Maycock said that while AGL was committed to working with policy makers and play a proactive part in enabling Australia to meet carbon reduction targets, consistent with the objective of limiting human induced climate change impacts to warming levels of less than two degrees Celsius, it needed to be mindful of its economic obligations to shareholders.

AGL's statutory net profit after tax was $218 million, down 63% on the previous year, largely due to the transaction costs in boosting its coal interests and writedowns of its upstream gas businesses, primarily reserves reductions at the Gloucester CSG project in New South Wales, gas shortages at the Moranbah CSG field in Queensland leading to shortage of gas at the gas-fired Yabulu Power Station near Townsville, and the fall in global energy prices.

Overall the company's net profit after tax for the year was $630 million, up 12.1% on last year, thanks to its Macquarie Generation assets, and higher sales of gas to large industrial customers in Queensland.

"The board considers that this is a good result for the year, especially considering that the repeal of the carbon tax from July 1, 2014 had the effect of reducing earnings by almost $120 million compared with 2014," Maycock said.

Next year AGL expects its underlying profit will be between $650-720 million, with the company expecting charges and losses of $75 million to be more than offset by the first full year contribution from the Macquarie assets and cost reductions.

The company expects modest rises in electricity, gas and renewable energy certificate wholesale prices and a slowing in the decline of residential electricity consumption.

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