One of the more unfortunate parts of meta-commentary is having to cover material that you would normally tip-toe past holding your nose. Today that is Judith Sloan who has taken hypocrisy to a cosmic new low in her attack upon AGL:
Thanks to the Yanks, I say. We owe a debt of gratitude to energy company AGL and its loquacious American-born chief executive who has come here on a 457 visa.
The good thing is that AGL is a household name and so when the CEO tells us the company is changing and moving out of coal, we tend to sit up and listen. And some of us ask questions.
So how come our new American pal can tell us that the company is changing when it so recently bulked up on big purchases of coal-fired electricity assets? Recall that AGL was the successful bidder for the NSW government-owned power stations in the Hunter Valley, Liddell and Bayswater, in 2014. That’s right, three years ago.
Note also that AGL owns a very big (brown) coal-fired electricity plant in the Latrobe Valley in Victoria.
In fact, AGL is the biggest provider of coal-fired electricity in the country and more than 90 per cent of its (rising) profits is sourced from fossil fuels.
But we are still told to believe that the company is changing by moving into that rent-seeking space: renewables. But if you look at AGL’s profile of production, renewables are small beer and will remain so for a considerable period of time.
Now some might think hypocrisy by having to put up with the company’s marketing messages, egged on by a bunch of staffers some of whom have been trained by none other than Mr Inconvenient Truth himself, Al Gore.
But where you think hypocrisy, I think misleading and deceptive. I can’t believe that the Australian Competition & Consumer Commission hasn’t launched a case against AGL for using false information to attract customers. Surely a company that derives over 90 per cent of its profits from coal and gas can’t portray itself as green as grass.
This is all a part of the coal hysteria push currently underway in the Murdoch Press in the hope it can deliver Do-nothing Malcolm a poll boost.
Now, I’m not defending AGL. It does generate a lot of power from coal, roughly 60% at my last count. Though it is clearly transitioning away from that, it is still profiteering at the expense of Aussie households and business as much as anyone in the energy sector. It sold a lot gas reserves to the cartel.
But if you want to level accusations of hypocrisy, Judith, then take a look in mirror.
In her relentless bashing of the RET and decarbonisaton in general, Sloan has never once cared to mention her links with the gas sector. She is a former director of Santos, the company that is most singularly responsible for this entire energy debacle after it lied about having enough gas to feed its monster Curtis Island gas export plant:
As Santos worked toward approving its company-transforming Gladstone LNG project at the start of this decade, managing director David Knox made the sensible statement that he would approve one LNG train, capable of exporting the equivalent of half the east coast’s gas demand, rather than two because the venture did not yet have enough gas for the second.
“You’ve got to be absolutely confident when you sanction trains that you’ve got the full gas supply to meet your contractual obligations that you’ve signed out with the buyers,” Mr Knox told investors in August 2010 when asked why the plan was to sanction just one train first up.
“In order to do it (approve the second train) we need to have absolute confidence ourselves that we’ve got all the molecules in order to fill that second train.”
But in the months ahead, things changed. In January, 2011, the Peter Coates-chaired Santos board approved a $US16 billion plan to go ahead with two LNG trains from the beginning….as a result of the decision and a series of other factors, GLNG last quarter had to buy more than half the gas it exported from other parties.
…In hindsight, assumptions that gave Santos confidence it could find the gas to support two LNG trains, and which were gradually revealed to investors as the project progressed, look more like leaps of faith.
…When GLNG was approved as a two-train project, Mr Knox assuredly answered questions about gas reserves.
“We have plenty of gas,” he told investors. “We have the reserves we require, which is why we’ve not been participating in acquisitions in Queensland of late — we have the reserves, we’re very confident of that.”
But even then, and unbeknown to investors, Santos was planning more domestic gas purchases, from a domestic market where it had wrongly expected prices to stay low. This was revealed in August 2012, after the GLNG budget rose by $US2.5bn to $US18.5bn because, Santos said, of extra drilling and compression requirements.
“At the time of FID (final investment decision), there was a reasonable expectation during the early years that gas would be available in the market at the right price,” Mr Knox said. “However, large volume, long-term east coast gas supply and prices have tightened over the last 18 months, making third-party gas a relatively less attractive gas supply. This is what led to our announcement (that capital spending would increase).” For commercial reasons, Santos had not revealed the volumes of third-party gas needed to feed the second train.
Presentation slides reveal that by then, even with the $US2.5bn of extra spending, third-party purchases had grown from 140 terajoules a day, at FID, to 240 terajoules a day, or 20 per cent of east coast domestic demand.
The gas price subsequently skyrocketed on shortages and Australia’s decarbonisation plan collapsed as coal could no longer be substituted by gas. Renewables are a complete sideshow yet Sloan bangs on and on about them being the key driver.
Loyalty to ones colleagues is admirable, Janet, but not at the expense of one’s energy grid, country, species and planet.
The AFR’s Ben Potter has a better idea:
Prime Minister Malcolm Turnbull escaped from his summit with Andy Vesey with a face-saving promise from the AGL Energy boss to put Turnbull’s Liddell coal plant extension to his board and report back in 90 days, but not much else.
Vesey made it crystal clear in a one-page press release issued shortly after their meeting broke up that AGL would likely stick with its plans to replace Liddell with a combination of wind and solar energy, gas peaking plants, batteries and “demand response” of distributed energy resources.
Since that meshes fairly precisely with Chief Scientist Alan Finkel’s review of energy, and the Australian Energy Market Operator’s report on despatchable power supply released last week, the upshot was hardly surprising.
…They have, through the management, spelt out their post-Liddell strategy in great detail, and sold it to shareholders.
If they buckle they would be risking the company’s reputation with investors, as well as their own legal position.
That should be enough for them to stick to their guns.
It’s Judith Sloan’s lying gas mates that should be getting nationalised.