ASX energy shares need to take note of the latest commitment in the Australian energy sector to renewable energy.
There is a growing list of businesses that use or generate energy that are planning to reduce their emissions and move towards net zero in the coming decades. Both AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG) have made big commitments in the last 12 months.
EnergyAustralia is the latest major player to set out its plans to achieve net zero by 2050.
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$5 billion investment plan
Earlier this week, EnergyAustralia announced its first climate transaction action plan where it said it wants to achieve net zero in terms of its scope 1 and scope 2 emissions. It's also looking to "develop a decarbonisation pathway for scope 3 emissions by the end of 2024".
There are four key areas of this plan.
First, it's going to expand its renewable energy portfolio to up to 3GW by 2030.
Second, there will be an investment of over $5 billion in capital with partners into energy storage and initiatives for firming renewables.
Third, it's committed to closing the Yallourn power station and brown coal mine in 2028.
Finally, it's going to continue to transition Mt Piper towards a lower output, renewables firming role and "ultimately a reserve role prior to its retirement" and exit from its coal-fired thermal generation by 2040.
The Australian reported on comments by EnergyAustralia managing director Mark Collette who said:
The energy transition is really big. The targets that Australia has set, 82% renewables by 2030 relative to about 35%, well that level of ambition requires the whole industry to accelerate.
Our approach is very much to take actions that help accelerate the industry.
Collette also provided some colour on how the Mt Piper coal power station will be used, which will be that the retailer leaves the generator idle and only fires it up when the sun is not shining or the wind is not blowing.
Attention put on ASX energy shares
AGL also recently announced that it has entered into a structured transition agreement (STA) with the Victorian government regarding the Loy Yang A Power Station and the associated mine.
The STA means that AGL and the government are working towards a targeted closure date of June 2035. This will provide "reliable and secure supply" of electricity for Victoria by safeguarding the operations at a certain agreed minimum operational and performance availability levels until its closure date.
But, the STA does allow for scenarios where Loy Yang can close earlier than June 2035, with agreement from the government, such as if the power station is not needed for the supply of electricity.
AGL said this is consistent with its targeted closure dates and greenhouse gas emission reduction targets.
The ASX energy share is aiming to deliver 12GW of new renewable energy generation and firming capacity by the end of 2035.
AGL share price snapshot
Since the start of 2023, AGL shares have risen by 37%, as we can see on the chart below.
