Mike Cannon-Brookes supports tax heavy on gas as part of fix for energy crisis

Mr Cannon-Brookes, whose private firm Grok Ventures owns 11.28 per cent of AGL, said the problem in the eastern states’ energy market now was not a shortage of coal but coal plants breaking down because they were so old. About 25 per cent to 30 per cent of coal-power units in the National Electricity Market are offline for various reasons.

“It’s not a shortage of it. It’s very expensive energy and it breaks. So we have to move faster onto renewables, which yes is renewables … and transmission. That’s not a particularly complicated equation as to what we need. It’s just a question of how quickly can we roll it out.”

Nuclear makes ‘no sense’

Mr Cannon-Brookes said that from an individual consumer perspective, electrifying houses and buildings was also a key solution in the short to medium term.

On the policy front, a “capacity” mechanism that is being proposed for the National Electricity Market was worth considering, he said.

“I think it’s an interesting conversation. I think it needs to be explored quite deeply. It would be good if it was balanced correctly, to not maintain existing expensive resources.”

But nuclear power made “no sense” for Australia, being a “super-expensive” source of energy and a technology where the country had no advantage, he said.

“It makes no sense. It will not help us with this problem, takes decades to build, we have no capability, we have no talent. And guess what? Everyone building it elsewhere in the world [found] the costs blowing out massively.

“We see it in pumped hydro, we see it in concentrated solar thermal, we see it in tidal: lots of these sources of energy make great science experiments. When you actually try to build them at scale, they become engineering projects one by one by one.”

But he rejected the idea that increasing the production of natural gas was part of the answer, calling that “absolutely bulls—” because it was not going to solve the longer-term problem of decarbonisation.

He said there was no need for more gas-fired power, saying the Morrison government’s Kurri Kurri gas-power generator by Snowy Hydro in NSW was getting “less viable by the month.”

Mr Cannon-Brookes, through his private firm Grok Ventures, last month acted as a catalyst for AGL Energy’s last-minute decision to drop a controversial plan to split its business in two, with the intention that keeping the company whole would allow for a faster exit from coal power.

Catherine McCormack, managing director of investment banking at Jarden, who is advising Grok, told the Summit the campaign to topple the demerger made history in Australia in terms of the activism involved.

“The reality was that we were in uncharted territory as it relates to the campaign against AGL and the demerger,” she said. She noted it was the first time in Australian corporate history that such a campaign had been run in a way similar to those in the United States with activist investors such as Elliott and Engine No. 1.

Garden’s Catherine McCormack at the Summit. oscar colman

“The intention was to acquire a stake and agitate for change. That required a big collection of individuals and engagement of a full spectrum of stakeholders who were relevant to the company and who were affected by what was likely to be the outcome of the demerger,” Ms McCormack said.

She said it was critical to align interests across those groups and underscore why the emerger did not make sense and the opportunity to be grasped if the company stayed whole, both on value and ESG grounds.

“I think there was an under-appreciation as it relates to stakeholders and their understanding of ESG issues and what the challenge and also the opportunity is as it relates to decarbonisation and energy transition in Australia,” Ms McCormack said.

Mr Cannon-Brookes told the Summit AGL should exit coal power by 2035 at the latest, and preferably earlier to be aligned with the goals of the Paris Agreement, something several institutional shareholders support, including HESTA and Martin Currie.

Since foiling the demerger, Grok has been focused on refreshing the AGL board after the announced departures of chairman Peter Botten, CEO Graeme Hunt and two non-executive directors.

“We’ve had a huge number of people reach out, some of them in this room,” he said, underscoring the “more ambitious” leadership needed to steer through the energy transition.

“I’ve told everybody I’ve talked to, this is not your standard ASX board job. If you want to get paid a couple of hundred grand, drink some coffee at the top of the building, turn up every couple of months, this is not the job for you.

“This is going to be the hardest but most fulfilling board appointment you will do in your life, and probably the most meaningful transition you will make. This is the largest decarbonisation project in the world,” he said.

AGL’s circa 40 million tonnes a year of emissions were bigger than Sweden, Ireland and New Zealand, he noted. “This is the dirtiest company per billion dollars of market cap per megawatt of energy generated almost on the planet. It’s horribly shameful and we’re going to fix it. And if you’re a director that wants to be a part of that, awesome.”

Mr Cannon-Brookes also promised that AGL customers would get cheaper energy than they would if the demerger had gone through, and that plans would be made for workers for the transition.

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