"No place" for Cooper and Beach: Market Forces

ACTIVIST shareholder group Market Forces intends to file shareholder resolutions against Beach Energy and Cooper Energy, saying there is no place in the market for pure play fossil fuel companies and their expansion plans would result in Australia failing to meet its Paris Agreement target.
"No place" for Cooper and Beach: Market Forces "No place" for Cooper and Beach: Market Forces "No place" for Cooper and Beach: Market Forces "No place" for Cooper and Beach: Market Forces "No place" for Cooper and Beach: Market Forces

Cooper Energy's Sole gas project

Mark Tilly


Mark Tilly

The move widens activist shareholder pressure from the big end of town to Australia's midcap arena, though during last year's annual general meeting Beach did field four climate-related questions.

The group has already filed resolutions on behalf of more than 100 shareholders against Whitehaven Coal, questioning their expansion plans and how they aligned with international emission reduction targets, and said Beach and Cooper were next. 

"There is no place for pure play fossil fuel companies in a decarbonised economy. The question is whether they will exit gracefully, or wreak further environmental and financial havoc as they go down," Market Forces executive director Julien Vincent said. 

Much of Cooper's gas is used for manufacturing purposes, and when asked by Energy News what viable, alternative feedstock it should use, a Market Forces spokesperson said technological opportunities will be there "at some point in the future", and it was up to the company to decide whether they could be a player in that space. 

"What we are trying to do is see a plan that aligns with the changes to industry to meet a 1.5C scenario," they said. 

The group attacked Beach's plans to spend A$4 billion to increase gas production by 50% over the next five years, while it said Cooper is planning further capital expenditure which would lift gas production more than 10 times financial 2019 levels.

Cooper has been developing its Sole gas field in the Gippsland Basin, with gas sent for processing to the Orbost gas plant before being sent to a series of contracted customers drawn largely from Australia's manufacturing sector. 

The shareholder resolution "requests the company disclose, in subsequent annual reporting, a plan that demonstrates how the company will wind up its fossil fuel production assets and operations in a manner consistent with the climate goals of the Paris Agreement".

This would include details on capital expenditure, production guidance, decommissioning and rehabilitating assets, workforce arrangements and capital being returned to shareholders. 

Beach's and Cooper's Annual General Meetings are expected to be held in November. 

A Beach Energy spokesman told Energy News it has been widely accepted that gas will play a critical role in decarbonising the global economy for many decades to come. 

"The International Energy Agency in its Beyond 2 degrees Scenario envisions gas usage growing by 6% by 2030," the spokesperson said. 

The Beyond 2C Scenario sets out a rapid decarbonisation pathway to achieve net-zero emissions by 2060. 

Market Forces and the Institute for Energy Economics and Financial Analysis believe this scenario falls well short of the Paris goals,  with only a 50% chance of limiting average future temperature increases to 1.75°C. 

"The IEA scenarios, including the beyond 2 Degree scenario, are flawed as they assume CCS development success which is not consistent with where CCS is at. They are not consistent with 1.5C," the Market Forces spokesperson said. 

The Beach spokesman referred to the company's climate change policy, released last year, saying the company is committed to "identifying, managing and mitigating material climate risks to business" and "measuring and reporting carbon emissions as required". 

"We recognise that all industries can and should do more to reduce emissions and Beach is committed to that cause," the spokesman said. 

In its 2019 sustainability report, Beach said it will not set emission reduction targets until FY2021. 

 eachtwaygasplantjpg Beach Energy's Otway gas plant.

Cooper did not respond to requests for comment, but the company's 2019 Sustainability Report states it has several initiatives underway to reduce Scope 1 emissions, including eliminating well testing and flaring where possible, and has invested in video-conferencing technology to reduce the need for business travel. 

It also refers to the same IEA scenarios and the Australian Energy Market Operator reporting gas supply shortages from 2024. 

"Overall it is considered the company's operations are resilient to the risks identified and the company is well placed to both contribute to emissions reduction and to benefit as society moves to lower carbon power sources, particularly gas," it said. 

Market Forces said institutional investors increasingly understand the financial imperative to manage their investment that supports the transition to a low-carbon economy to meet the climate goals of Paris.

It also noted the wealth destruction caused by the COVID-19 pandemic which had resulted in tens of billions of dollars being written off in the Australian oil and gas industry though, with the exception of Senex Energy's $52 million Cooper Basin oil-centric write off of yesterday, has only concerned the large end of town and is largely related to LNG assets. 

Market Forces has not made clear for the layperson the small but important difference between LNG projects linked to falling oil prices and the resulting second quarter write downs, and the ongoing demand for gas in the east coast domestic market which both Cooper and Beach supply. 

"Investors must take this opportunity to manage the necessary decline of the fossil fuel sector," Vincent said. 

Activist shareholder groups like Market Forces and the Australasian Centre for Corporate Responsibility are making inroads to climate related shareholder resolutions, as investors become more concerned as the effects of climate change become more apparent. 

Last week, ACCR filed a resolution with power company AGL Energy for it to bring forward the closure of its Bayswater and Loy Yang A coal-fired stations. 

It is the second time the ACCR has tried to pass resolutions at the AGL; last year a resolution won 30% of the votes, unthinkable several years earlier.

An ACCR resolution at the Woodside Petroleum AGM of April won 50% of the vote. 

Woodside's revised up carbon price of US$80 per tonne, over the early $40/t, reflects a 1.5C scenario, it said last month.