One of Australia's largest energy companies Origin Energy has committed to closing down its Eraring coal-fired power station by the early 2030s and not investing in any future fossil fuel assets as part of a major commitment to reducing carbon emissions.
Origin will also set its own individual carbon reduction targets as it becomes the only energy company in the world to fully endorse principles established by a global coalition of companies, investors and NGOs to show leadership on climate change.
The company, which also has significant gas-fired power generation assets, will commit to a goal of 100 per cent renewables, but the company conceded it would need to keep some gas-fired power stations as back-up for renewable energy sources such as wind and solar.
The move, to be be announced at Origin's annual general meeting in Sydney on Wednesday, follows AGL Energy's announcement in April about closing down its coal-fired power stations by 2050.
Eraring is Australia's largest power station with a generation capacity of 2880 megawatts. It had a 50-year-life and was due to shut in the 2030s regardless.
Origin has signed up to all seven principles from the CDP (formerly Carbon Disclosure Project)/We Mean Business commitment to climate change.
It joins 40 other Australian companies and 200 companies globally which have signed up to the principle ahead of climate talks in Paris later this year.
Origin Energy managing director Grant King – who has been going out of his way in recent years to position the company behind renewable energy - said energy companies were responsible for two-thirds of global carbon emissions and had an obligation to change their behaviour.
"Origin has been preparing for a carbon constrained world for a long time and will continue to play an active role in developing low carbon and renewable energy solutions to meet the world's growing demand for energy," Mr King said.
"The way we conduct our business today already includes much of what is in the commitments. But we can do better and by joining this coalition demonstrates not only are we serious about these issues, but we are prepared to be open and transparent about our efforts."
The seven principles also includes reporting climate change information in mainstream reports, responsible corporate engagement on climate policy, setting measures to factor in the cost of carbon internally to materially affect investment decisions, reducing short-lived climate pollutants and removing commodity-driven deforestation from supply chains.
Origin chairman Gordon Cairns said the company was committed to Australia reducing its carbon emissions to help reach the global reduction target of 2 per cent on pre-industrial levels.
Australia has been criticised for its commitment to reduce carbon emissions by 26 to 28 per cent by 2030.
CDP Australia and New Zealand director James Day said Origin's commitments showed the company was embracing the realities of a move to a low-carbon economy.
"Origin is the first energy company in the world to endorse all seven principles. This is significant because Origin is a major carbon emitter which means energy companies must play a central role in delivering the solutions that will help reduce emissions globally," Mr Day said.
Energy companies such as Origin and AGL have been the focus of environmental activists who have been attempting to force stronger action on reducing emissions and moving away from fossil fuel assets.