Mike Cannon-Brookes’ industry raid on AGL, Australia’s most important polluter, is putting its sluggish coal exit program under scrutiny
Australian program billionaire Mike Cannon-Brookes produced a remarkable $660 million market place raid on Australia’s most important coal generator and polluter AGL this 7 days, vowing to oppose its proposed demerger and fasttrack its exit from coal.
Grok Ventures, the non-public investment firm of Cannon-Brookes and his spouse Annie, employed brokers to stand in the marketplace late Monday to snap up an 11.28% voting stake, which could be ample to thwart the demerger at the impending shareholder meeting in June.
Of all the points that have and will be mentioned about Cannon-Brookes and his landmark siege of AGL, the one that looks to get under his skin the most is the declare that he is the particular person dependable for the early closure of Australia’s coal generators.
It’s an assault line that is readily deployed by fossil gas lobbyists and Coalition conservatives, if you’ll excuse the tautology, due to the fact there is almost nothing so easy as throwing darts at somebody when you are attempting to cover a entire things up.
It matches with the rhetoric that it is the inner town elites that are meddling with the futures of coal industry staff, not world-wide financial, technological know-how and environmental aspects. And it annoys the heck out of Cannon-Brookes.
“The factor I press back on is persons say like, ‘Oh, Mike desires to shut down the plants’,” Cannon-Brookes advised RenewEconomy in an interview previously this 7 days.
“I’m like, let us be crystal clear listed here: These vegetation are shutting down.
“That helps make me want to issue how we do that, how we do it in a way that retains charges down, how we do it in a way that values the staff that function there and does not just toss them on the street, how we do it in a way that can be financed and managed to transition in a far more steady sense.”
Cannon-Brookes suggests the last coal device must be shut by 2035 at the most recent, and major endeavours designed to make sure that the replacement capability – renewables and storage – is sent by then.
“There’s a selection of reasons we will need to get it done,” Cannon-Brookes suggests.
“Certainly the weather science would say that it requirements to be done considerably far more fast than the company’s recent closure date of 2045. And the financiers would say it requirements to be happened far more swiftly than that.
“Find me a model exterior of AGL that displays that these plants are in any way equipped to be operate in 2045. There is also the circumstance that… attracting cash requires you nowadays to have a plan that is fairly aligned to a variety of worldwide weather agreements.
“That would necessitate, in my being familiar with, 2035 is almost certainly the exterior day and you require a truly credible strategy to say that which is the final day, when the last device of the very last coal plant will be shut down.”
AGL paints this an extraordinary situation. But it’s not acquired several supporters of that view.
Immediately after all, the NSW Coalition authorities is operating on the assumption that all of the state’s black coal generators (which include AGL’s Bayswater) will be shut in a 10 years, which is why it is operating on a renewable infrastructure approach that will very likely change out to be one of the most significant and speedy transitions in the western planet.
And the Australian Electrical power Marketplace Operator’s latest arranging document, known as the Built-in Program Strategy, assumes that all brown coal generators (together with AGL’s Loy Yang A) will also be absent inside of a decade.
It’s essential to observe that AEMO’s situation scheduling is endorsed by the overpowering vast majority of the electricity industry, and a growing quantity believe that the changeover will – and have to – be even a lot quicker than that.
But not AGL. Its business approach assumes Loy Yang A will hold making, and polluting, for a further 13 years, until 2045. It desires to split the business into two to handle the changeover at its have velocity.
Cannon-Brookes suggests this posture is completely untenable, given what is at stake for staff members, the setting and the upcoming of the business, and has vowed to prevent the business break up.
It has now turned into a bitter battle. Cannon-Brookes advised RenewEconomy earlier this week – a working day just after launching his market place raid – that he was “sick of them [the AGL board] fucking it up.”
AGL retorted on Thursday by accusing the Cannon-Brookes team of generating “false claims”, which includes the observation that AGL has produced no direct investment decision in renewables more than the final 5 yrs.
AGL suggests it has invested $4.8 billion around the last two many years in renewables. The irony is that though that might be accurate, it does not suggest that Cannon-Brookes’ claim is bogus.
The argument that AGL has built no direct expenditure in renewables in the very last five decades is supported in the extremely very same document that the corporation utilised to assault Cannon-Brookes. As this map under reveals, all the most current tasks have been funded by “third parties”.
But this dispute about direct and indirect financial investment misses the point.
The central drive of Cannon-Brookes’ tilts at AGL – very first in the turned down joint gives manufactured by his non-public firm Grok Ventures and Brookfield, and now via the on market raid – is about the pace of AGL’s changeover.
He states it is way much too slow.
AGL, let’s bear in mind, is the biggest generator of coal in Australia and the most important one greenhouse polluter in the state, and Cannon-Brookes suggests its strategy is in no way aligned with a 1.5C or even a 2C concentrate on.
A decade ago, AGL’s then CEO Michael Fraser justified his eye boggling investment decision in coal generators by declaring it would deliver the cash movement to commit in renewables. Let us burn up coal so we can make much more renewables, he argued at the time.
It didn’t seem correct then and it doesn’t now. (Bizarrely, Origin Energy’s Frank Calabria is applying a related argument to justify the company’s huge fuel investments, even while it has picked out to speedy monitor the closure of its remaining coal generator at Eraring).
And in AGL’s circumstance, it has not turned out the way Fraser suggested it would. He was succeeded by American Andy Vesey, who tried using to modify the colour of the enterprise system back again to environmentally friendly but acquired hounded out of the occupation when he declared the closure of Liddell.
AGL claims to have invested in 2.3GW of renewables in the previous 20 yrs, but presented the time-frame, the size of the Australian current market and its dominant posture, that is not actually a heck of a good deal. It has been additional interested in satisfying shareholders with its gains from coal.
Now AGL, in accordance to this week’s presentation, is indicating it will devote 3GW in renewables and versatile potential by 2030. Once again, that doesn’t occur shut to what’s most likely needed to enable an early closure of its remaining coal generators.
It is an essential place since AGL is suggesting that 2045 is the previous doable date for closure of Loy Yang A, not the genuine goal day. And it is suggesting that this could be introduced forward if more than enough renewable potential can be constructed in its place.
That seems a whole lot like Cannon-Brookes’ strategy. The significant change is around the velocity of that investment and the transition, and Cannon-Brookes’ rivalry that this is greatest performed by AGL as a solitary entity relatively than break up in two.
Cannon-Brookes also points to the contradictory messages sent out by AGL over Liddell, the ageing, clapped out generator that will shut its very last unit next calendar year, and Bayswater, positioned correct subsequent doorway that AGL needs to operate for at the very least a different 10 years.
“It boggles the brain that in Liddell, we’re going to make this superb environmentally friendly hub with industrial amenities and batteries and all this stuff, we’re making use of the land and the assets and stuff, but at Bayswater they say we cannot do that, it’s way way too hard,” Cannon-Brookes says.
“I’m like, cling on, are they basically various? Reveal to me the elementary change among Liddell and Bayswater. There isn’t a single. It’s bullshit. It is completely feasible to be performed. So you’ve just got to go out and do it.”
The variation between Cannon-Brookes and the many many others who assume that way is the truth that he has the means, and is keen, to lay $650 million on the table to deliver the issue to a head.
That is a big change from the Twitter trade with Elon Musk that led to the construction of the Tesla big battery in South Australia, or his social media campaign versus Scott Morrison’s “fair dinkum” electric power dismissal of renewable electricity.
This is an all in confrontation with a bastion of corporate Australia and a person of the most impressive and influential providers in the state. There is a lot at stake, not just for AGL, but for the relaxation of the fossil gasoline industry, and the state for that make a difference.
“It’s not philanthropic. It is not a charitable physical exercise,” Cannon-Brookes suggests. But it does mark just one of the critical moments in Australia’s environmentally friendly power changeover. And the earth is viewing.