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AGL bows to green pressure and hives off its coal assets

Business

AGL has bowed to environmental pressure and will hive off its coal assets into a separate company.

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The company has announced the separation into a low-carbon retailer to be known initially as New AGL and the generator company, PrimeCo.

Chief executive Brett Redman said the separation would give both companies focus and clarity while being able to set their own strategies and agendas.

New AGL would be carbon neutral for scope one and two emissions (direct and indirect emissions) “on day one with a clear pathway to carbon neutrality”.

The split follows intense pressure on companies from the funds and other investors over their exposure to environmental, social and governance (ESG) issues.

Redman said PrimeCo would account for 20 per cent of the generation in the national electricity market. It would hold AGL’s thermal coal generators and would develop its existing sites into energy hubs operating Australia’s largest wind portfolio and developing future wind projects.

“The forces that are driving the imperative to create this new path are the same ones that are now calling for tangible action in the short term,” Redman said.

“At our results in February, we talked about those shaping forces of customer, community and technology were accelerating faster than we anticipated.

“Coupled with continuing pressure on wholesale electricity prices, if anything that pace has only picked up in the past few weeks.”

It has begun the sale process of its Silver Springs gas storage reservoir in Queensland as well as the Newcastle gas storage.

The New AGL would also support renewables as an “off-taker” and equity holder in the Tilt Renewables portfolio being aquired by PowAR.

The AGL demerger came as Santos announced the go-ahead for the $US3.6 billion ($A4.7 billion) gas and condensate Barossa project, located offshore of the Northern Territory.

Santos said the financial investment decision also kick-started the $US600 million investment in the Darwin LNG life extension.

 

 

 

 

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