20 October 2020
Origin Energy took advantage of the COVID-19 situation to stifle shareholders’ rights to challenge the company at its annual general meeting today.
After taking questions from shareholders for less than 40 minutes, Origin Chair Gordon Cairns refused to accept any more questions on Traditional Owner concerns around the company’s plans to open up the massive Beetaloo Basin gas field to fracking, or the clear inconsistency between Origin’s gas plans and its claimed commitment to the climate goals of the Paris Agreement.
Up to that point, questions on these issues from shareholders, Aboriginal Traditional Owners, and community representatives had dominated the meeting, demonstrating the broad opposition to Origin Energy’s dirty, dangerous and destructive gas plans.
The COVID-19 pandemic has forced company AGMs to be held online, meaning companies can much more easily moderate and control shareholders’ questions and interactions with the board.
Free Prior and Informed Consent of Aboriginal Native Title holders
A number of Aboriginal Traditional Owners, including Mudburra man Raymond Dixon, Alawa woman Naomi Wilfred, Southern Aranda woman Vanessa Farrelly, and Widjabul woman Larissa Baldwin, all voiced their opposition to Origin’s Beetaloo Fracking plans.
Particular concerns and questions raised regarding impacts on sacred water systems, including dewatering and toxic waste water associated with fracking.
The Australasian Centre for Corporate Responsibility had also supported shareholders, for the third year in a row, to lodge a resolution calling on the company to review whether the free, prior, and informed consent of Aboriginal Native Title holders had been properly obtained for the Beetaloo project.
This resolution received 11.8% of support from shareholders, and fortunately further questions on this particular issue were allowed at this later stage of the meeting.
Shareholders also raised concerns about the climate impacts of Origin’s gas production and coal power generation.
The proposed Beetaloo project could add an extra 22% to Australia’s total annual emissions, when we know emissions need to fall by around half by 2030. Before being silenced on this issue, shareholders called out the fact that this massive gas project cannot possibly align with Origin’s stated support for the Paris climate goals.
On top of its extensive gas operations, Origin also operates Australia’s largest coal-fired power station, which the company intends to continue operating for two years beyond the 2030 Paris-aligned deadline for Australia to be completely coal power-free.
Origin has set emission reduction targets based on an outdated scenario with just a 50% chance of limiting global warming to 2°C. In response to shareholder questioning, Cairns confirmed the company is planning to update its targets in line with a 1.5°C warming outcome, but could not provide a date by which this will happen.
Given Origin’s previous targets allowed the company to stick with its “business as usual” plan for closing the Eraring coal power station, and conveniently excluded the vast majority of the emissions caused by the end use of Origin’s gas, investor pressure will be integral to ensure the company very soon sets new targets that are clearly consistent with a 1.5°C warming outcome.
Assuming the failure of Paris
Origin assumes oil prices will rise to US$60/bbl (real) by 2026, and notes a US$1/bbl change in the oil price would cause a A$223 million change in the value of the company’s APLNG project.
The International Energy Agency’s Sustainable Development Scenario, which gives just a 50% chance of holding global warming to 1.65°C, forecasts oil prices of US$57/bbl in 2025, falling to US$53/bbl by 2040. A 1.5°C scenario would obviously imply even lower prices.
When asked why doesn’t Origin use assumptions aligned with the Paris climate goals in its financial statements, Cairns stated the board’s belief that the price forecasts used were “appropriate”.
This is entirely inconsistent with the expectations of investor groups representing over US$100 trillion in assets under management that “the assumptions made by companies in preparing financial statements under International Financial Reporting Standards be compatible with the Paris Agreement”.
Origin’s auditor, EY, was asked whether a 1.5°C or well-below 2°C scenario was considered when assessing Origin’s oil price assumptions. An EY representative said climate change had been considered as part of the audit, but did not confirm whether any specific scenarios and their resulting impact on commodity price forecasts – and therefore asset valuations – had been applied.