In today’s Money Morning…Australian billionaires are pumping money into the green economy…it’s not just about being green…it’s a megatrend that will continue for years to come…and more …
Well, it’s done.
Billionaire Mike Cannon-Brookes foiled AGL’s plan to split the company in two.
Last year, Australia’s biggest electricity supplier and biggest carbon emitter announced plans to split up the business. Accel Energy, a new company, would take over AGL’s fossil fuel assets. On the other hand, AGL would focus on the commercial part of the business.
But Cannon-Brookes argued that splitting the company would mean higher costs and lower dividends for shareholders. He thought keeping the whole company would make it more resilient to the energy transition.
As he says:
‘[W]We fundamentally believe that there can be a better future for AGL. A future that brings cheap, clean and reliable energy to customers. A future that accelerates the transition to net zero and a future that creates opportunities for AGL and value for its shareholders along the way.‘
Through Grok Ventures, Cannon-Brookes invested approximately $650 million to accumulate an 11.28% stake in AGL, becoming the company’s largest shareholder. It has also secured support from the Hesta superfund and other prominent shareholders.
On Monday, AGL canceled the split plan. While the AGL board still believed in it, they realized they just didn’t have the votes.
As AGL said in the announcement:
‘Given the anticipated voter turnout and declared opposition from a small number of investors, including Grok Ventures, AGL Energy believes that the proposed split will not receive sufficient support to meet the 75% approval threshold. for a plan of arrangement.‘
Today, four directors of AGL have resigned. What remains of the board plans to conduct a strategic review, and Cannon-Brookes is pushing for two seats on the board.
While the derailment of AGL’s shareholder spin-off is the top energy news this week, there’s another reason I’m bringing up this story.
Australian billionaires pump money into green economy
AGL isn’t Cannon-Brookes’ only involvement in the energy transition.
He also invested $78.8 million in energy lender Brighte and another chunk in Genex Power [ASX:GNX].
It’s something his Atlassian co-founder and fellow billionaire Scott Farquhar has also invested in through Skip Capital.
Anthony Pratt, executive chairman of Visy Industries and Pratt Industries in the United States, will invest $2 billion in recycling and clean energy over the next decade.
As he said recently:
‘People are demanding more recycled content in manufacturing and packaging, so reducing landfill will be a huge issue and by keeping paper out of landfill and producing 100% recycled packaging, and even converting our waste not recyclable into clean energy, our manufacturing business model avoids over 5 million tonnes of methane emissions each year.‘
And, of course, Andrew Forrest was a great champion of renewable energy.
Forrest has invested alongside Cannon-Brookes in the Sun Cable project, an undersea cable that will export solar power to Singapore.
But he also recently took the reins of Fortescue as he prepares the company for the energy transition.
And Forrest has ambitious plans.
Through Fortescue Future Industries, the company seeks to build 235 GW of renewable capacity to supply green power and hydrogen from projects around the world.
I mean, it’s huge.
Just to give you an idea, that’s five times the size of the Australian network in 2020.
He is also betting big on green hydrogen.
As he says:
‘Our greatest natural resource is not iron ore, it is not gold, it is not gas, it is certainly not oil or coal, it’s green hydrogen.
‘The green hydrogen market could generate US$12 trillion in revenue by 2050, far more than any industry in existence today. Even Australia’s huge iron ore sector, which generates export revenues of over A$150 billion, is barely a hundredth of that figure.‘
The fact that some of the wealthiest Australians are investing in the green economy is something to consider.
It’s not just about being green
Yes, it is about a cleaner future.
But it’s also about renewables offering some of the cheapest forms of energy, especially as war and the energy crisis are driving up fossil fuel prices.
Some Australian manufacturers are already reporting a 12% increase in their electricity bills… and expect their gas bills to triple. Something that will likely be passed on to consumers.
And, of course, renewables have the ability to create huge amounts of cheap energy. To quote Forrest again:
‘We must remember that the Stone Age did not end because we ran out of stones, we must remember that [renewable energy] is a better fuel source. This is completely carbon free. It’s infinite.‘
It’s not too late to invest in renewable energy — it’s a megatrend that will continue for years to come.
Until next week,
For silver morning
Selva is also the editor of New energy investor, a newsletter that looks for opportunities in the energy transition. To find out how to subscribe, click here.