The head of Australia’s biggest energy utility – and its biggest coal generator – says that if any Clean Energy Target is to be effective it has to take into account global climate targets.
AGL CEO Andy Vesey suggested that if Australia’s climate target was not strong enough, then it would have no impact, because investors needed to take a long-term view of their assets.
“If we are serious about 2°C, or even 1.5°C, we have to ask ourselves how to get there,” Vesey said. “Some serious thought has to be given to the long term (such as carbon budgets).”
The adoption of the CET is now at a crossroads, with the Turnbull government refusing to adopt it, despite pressure from state governments and an offer of compromise from the federal Opposition.
The Finkel Review’s recommendation of a CET was criticised because it was based on the government’s current emissions reduction target, which calls for a cut of 26-28 per cent by 2030, well short of what is needed to meet the Paris climate targets.
Meeting those targets would have an impact on AGL, because it wants to keep its Loy Yang A brown coal generator operating until 2048, something that appears incompatible with a strong climate target.
Vesey said that whatever new rules were made, his company would find a way to adapt to ensure it maintained its returns to customers.
“You set the rules, I will find a way to do that (get returns for customers),” Vesey said, adding that the Finkel Review blueprint should be adopted in its entirety, not just 49 out of 50 recommendations with the CET left out.
“It is not a menu. We are ready, let’s get it done. It’s time to get this done.”
Vesey also said that the current high prices for consumers were not sustainable for the industry. “We cannot deliver to shareholders if prices stay where they are. It can’t be done,” Vesey said.
This reflected comments by GE Renewable Energy chief Jerome Pécresse who warned that customers would defect – either entirely from the grid, or at least from load – as renewable and storage prices continued to fall.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.