The AGL (ASX:AGL) share price has lost 8% so far this month. What's next?

Will the company's planned demerger be enough to sate demand for emission reductions?

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The AGL Energy Limited (ASX: AGL) share price has been struggling in November despite no news having been released by the company for more than 3 months.

In fact, the company's stock hit a record low of $5.10 in intraday trade yesterday.

At the time of writing, the AGL share price has recovered to trade at $5.28, 0.86% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is up 0.73% today.

Let's take a look at what the future might hold for AGL and its shares.

a person holds their head in their hands as they slump forward over a laptop computer which features a thick red downward arrow zigzagging downwards across the screen.

Image source: Getty Images

Could this be the future of the AGL share price?

The share price of AGL – Australia's largest carbon emitter – has been suffering amid the release of the final consensus from more than 190 countries engaged with the COP26 UN Climate Conference.

The agreement was described by United Kingdom Prime Minister Boris Johnson as sounding the "death knell for coal power".

That may have renewed pressure on AGL to back away from its coal-fired power stations.

According to reporting by The Age, on Monday, AGL chief operating officer Markus Brokhof told a conference he agrees COP26 outlined the world's determination to ditch coal power. The Age quoted him as saying:

In general, it's a clear sign [that] the energy industry, in particular the carbon-heavy industry, has to go.

The company already plans to shut down its NSW Liddell coal-fired power station in 2023. However, it's not expecting to close its Loy Yang power station in Victoria until 2048.

That's despite the majority of AGL shareholders voting in favour of the company providing new emissions reduction targets in line with the Paris Agreement at its annual general meeting (AGM). This occurred despite the company urging them not to. The AGL share price gained 2.9% on the day of its AGM.

So, what is AGL doing to sate investors' demands for emission reductions?

Well, as most investors will be aware, one initiative is the company's plan to split AGL in two.

One of the resulting halves, Accel Energy will walk away with AGL's coal-fired assets.

The other, AGL Australia, will take its retail businesses. AGL Australia is expected to boast net-zero scope 1 and 2 emissions.

The company is also targeting net-zero operational emissions by 2050.

Whether that will be enough to ease the pressure on AGL is yet to be seen.

The AGL share price has fallen 13% in the past month. It is also 56% lower than it was at the start of 2021.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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