A polar blast from Antarctica has left many Australians shivering in their homes, as icy winds have torn down power lines. It feels like a portent of things to come. Even without electricity outages, Australians are contemplating turning off their heaters and putting on extra cardigans as the national regulator announced price increases of up to 18 per cent from the start of July.
The cold snap won’t bother Mike Cannon-Brookes. He’s unlikely to be switching off lights in spare rooms at his $100 million Point Piper mansion or any of his other trophy homes. On the contrary, he was cock-a-hoop. ‘Wow. A huge day for Australia,’ he tweeted on Monday. Having bought just over 11 per cent of the shares of AGL, Australia’s largest energy provider, the rich lister climate activist successfully intimidated management into dropping its plan to split its retail business from its coal-fired power plants, sparking the resignation of the CEO and the chairman of the board, as well as two other directors. Management was convinced that a majority of shareholders supported its plan but they needed 75 per cent and rather than put the proposition to a vote they turned tail and ran.
Caving into to Cannon-Brookes didn’t impress AGL shareholders, with the stock price falling this week, but that is unlikely to worry the billionaire who has money to burn and has been retweeting the thoughts of António Guterres, secretary-general of the United Nations, and a former socialist prime minister of Portugal. Guterres is grumpy that ‘We still see funding for coal & fossil fuels from some of the biggest names in finance, hedge funds & private equity,’ and tweeted that ‘Investing in fossil fuels is a dead end – economically & environmentally,’ and ‘No amount of greenwashing or spin can change that,’ exhorting his followers, ‘Don’t work for climate-wreckers.’
No prizes for guessing who are ‘the climate wreckers’ that are still investing in fossil fuels. China’s Yankuang Energy Group is keen to buy out other shareholders in Yancoal, an Australian coal producer and developer operating open cut and underground coal mines in New South Wales, Queensland and Western Australia.
China’s enthusiasm for fossil fuels doesn’t worry Australia’s climate zealots. Australia’s emissions of carbon dioxide peaked in 2009 at 390 megatons (Mt) and have now fallen to 376 Mt, less than 45 per cent of our emissions in 1990 whereas China’s emissions are more than 2600 per cent greater, at 9,876 Mt, and it has said it will not even try to cut them until at least 2030 or to reach net zero until 2060, ten years later than other countries.
Despite this, during the federal election campaign Allegra Spender, the new teal member for Wentworth told Sky’s Chris Kenny, that China’s climate policies were ‘incredible’. The most incredible thing about China’s climate policies is that Ms Spender would praise them. China’s plans for 169 new and expanded coal projects will boost domestic coal production by 559 million tons per annum, and could boost global methane emissions, the most powerful greenhouse gas, by 10 per cent. It also increased its raw coal output by 10.5 per cent in the first four months of 2022 and expanded coal imports in April by 8.4 per cent year-on-year.
India is also planning to import Australian coal this year, for the first time since 2015, amid fears of power shortages during peak demand over the summer. This is despite the fact that the price is more than three times higher than at the end of last year, driven up by Europe seeking to replace Russian supplies following the invasion of Ukraine. Rather than fuelling increased investment in renewables as the green dreamers claim, the high price of coal may simply spur India, like China, to mine more coal domestically.
Despite the rising global demand for fossil fuels, new Labor prime minister Anthony Albanese has decided to force taxpayers to bankroll the profits of wealthy renewable investors like Cannon-Brookes and Macquarie Bank by using government money to foot the bill for expanding and upgrading the energy grid to handle more renewables. Labor hopes to trick taxpayers by hiding the costs off-budget, as it did with the public money it sunk into the NBN. It is music to the ears of green champagne socialists – public subsidies to cover the costs of building new infrastructure while private investors milk the profits.
AGL was planning to close the last of its coal-fired power plants between 2040 and 2045 instead of 2048, but Cannon-Brookes wants those dates brought forward to 2035 and to invest A$20 billion in renewable energy and storage solutions. Yet even with taxpayers covering the cost of upgrading the grid, the early closure will mean greater reliance on energy sources which will be more expensive than existing coal-fired power plants. One analyst estimates that AGL will have to spend at least $10-$15 billion to replace $1 billion of earnings coming from coal assets. In addition, having dumped its demerger, AGL will also have to establish new debt facilities in a far more difficult environment, with higher interest rates and even greater environmental hurdles.
Cannon-Brookes thinks his plan is in the best interests of ‘shareholders, customers, Australian taxpayers and the planet’, no less. Yet one wonders how in touch he is with his customers few of whom could afford to take up a green loan of $100,000 he wants AGL to offer to back their ‘decarbonisation journeys’ to convert their households to 100 per cent renewable electricity.
Indeed, there is a distinct air of unreality about the wish list of Cannon-Brookes’ backers who want Paris-aligned climate goals, a genuine decarbonisation plan that maintains jobs without a huge increase in prices, and enhances and protects shareholder value, while providing comprehensive support for impacted communities. AGL has said it is open to new approaches from third parties, but as one analyst remarked, ‘who would be willing to take on the whole business in the current political climate is beyond me’.
Cannon-Brookes says he will be seeking assurances from what is left of AGL’s management that the new plan they come up with is not simply to sell off AGL’s assets piece by piece. But whatever plan they come up with his green pipe dreams will cost the rest of us dearly.
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