AGL Energy (AGL) , Australia's leading power producer and...

AGL Energy (AGL) , Australia's leading power producer and biggest carbon emitter, expects to speed up plans to shut its coal-fired plants, but the phase-out is unlikely to happen before 2040, Chief Executive Graeme Hunt said on Thursday.

Following a United Nations climate panel report https://www.reuters.com/business/environment/un-sounds-clarion-call-over-irreversible-climate-impacts-by-humans-2021-08-09 on Monday that highlighted the urgent need to cut greenhouse gas emissions, climate activists stepped up calls for AGL to shut its coal-fired power plants by 2030.

Hunt said Australia's power grid would need coal well beyond 2030.

"We get that ... the biggest impact that can happen on decarbonisation in Australia is how we manage the transition in this company," Hunt said.

"But we can't make unilateral decisions to close our coal plants without having dire consequences, both in terms of the affordability and reliability of electricity in the NEM (National Electricity Market) and the negative impacts that will have on our workforce, our communities and our shareholders."

AGL, officially ranked as Australia's largest emitter of greenhouse gases, plans to phase out its coal-fired plants by 2048, when its Loy Yang A plant is scheduled to close.

"The technical life of Loy Yang is 2048. The economic life will no doubt be shorter than that," Hunt said, after AGL reported a 34% slump in underlying annual profit, following a collapse in wholesale power prices.

He said whether it shuts six months or six years earlier than 2048 was hard to predict, but it was unlikely to be as much as six years earlier as all the power capacity needed to replace it would not be in place by then.

Consultants PwC estimate that for Australia to achieve a target of 90% renewable power by 2040, around A$53 billion ($39.02 billion) would have to be invested in renewables to replace coal- and gas-fired plants.

Potentially prolonging the life of coal-fired plants, the Australian government is considering a proposal to make capacity payments to generators that are always online to ensure stability in the grid when wind and solar are unavailable.

($1 = 1.3581 Australian dollars)