“Australia’s ageing coal-fired power stations will continue to close,” Bowen said. “We need to ensure that the closures are properly managed and that we invest in the firmed dispatchable renewable energy, along with storage and transmission, to replace the lost energy generation.”

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The National Energy Market relies on private investment to deliver new electricity generation, with the market operator identifies new opportunities for investors based on forecasts.

In the past two years state and federal governments have outlined strategies to encourage new renewable energy into the market by funding new transmissions lines to link new wind and solar farms to the grid, and opening funds to stimulate investment.

Opposition climate change and energy spokesman Ted O’Brien said there was no guarantee for what new infrastructure would be delivered.

“Labor is gambling on the premature closure of power stations to drive the uptake of renewables without any guarantees of replacement generation,” O’Brien said.

AGL’s interim chief executive Damien Nicks said the company is aiming to deliver a whopping 12 gigawatts of renewable energy generation by 2036, such as wind and solar farms, and firming capacity such as batteries and pumped hydro power. AGL has set an interim target of 5 gigawatts by 2030.

The $20 billion strategy will be funded from a combination of assets on AGL’s balance sheet, offtake agreements and partnerships.

AGL has been under shareholder pressure to shut its coal-fired power stations in the 2030s since a campaign by billionaire businessman Mike Cannon-Brookes, a major shareholder, forced a backdown on plans to split its coal-fired power stations from its retailing and renewable energy assets via a controversial demerger.

Cannon-Brookes has outlined a vision for AGL to become a clean energy powerhouse and is backing four new board members for election – former chair of the Commonwealth’s Energy Security Board Kerry Schott, CSL board member Christine Holman, Professor John Pollears and and former Tesla director Mark Twidell.

When asked if AGL’s plans were based on Cannon-Brookes’ plans, McKenzie said that “the reins are very clearly held by the board and the management team”.

A spokesperson for Cannon-Brookes’ Grok Ventures welcomed AGL’s announcement, and again said that AGL needed “additional skills” around its board table to assist its transition.

“While this is a positive step in the right direction, as the largest emitter, and the leading energy company in Australia, AGL needs to assume a leadership position to achieve a Paris goal of below 1.5 degrees,” they said.

Steve Dodd, the secretary of the Gippsland Trades and Labour Council, said his organisation had not been consulted, though it was aware the company was undertaking an asset review that would be finished at the end of September.

“We are disappointed that AGL hasn’t seen fit to consult with the people who are most affected,” Mr Dodd said. “But this does give us some time to plan and engage with workers about where they are going next.”

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Environment groups broadly welcomed the accelerated closure, but questioned the company’s claim that it would bring its emissions in line with the Paris climate targets, which aim to keep the world to below 1.5 degrees of global warming.

“This timeline doesn’t meet the expectations of AGL shareholders who voted last year to demand the company adopt Paris-aligned climate targets,” said Environment Victoria spokesperson Bronya Lipski.

Green groups also said they expected the closure date would be brought further forward, prolonging the uncertainty for coal workers and the Latrobe Valley community.

David Ritter, the head of Greenpeace Australia Pacific, said the coming months represented a test for AGL’s new leadership. “This is a change which will make a real difference to the climate … the commitment to close it by 2035 has a real, tangible benefit to Australia and the world,” he said.

Victorian Energy Minister Lily D’Ambrosio, said at a press conference on Thursday morning that the government had been unaware of the announcement until Wednesday night. AGL’s news would be difficult for those who had powered Victoria through Loy Yang A for decades, she said.

The early closure raises questions about rehabilitation of the vast Loy Yang mine pit, which is used by both Loy Yang A and Loy Yang B power stations, and owned by Alinta. Loy Yang B, owned by Alinta, is officially due to close in 2047.

“Power stations and coal mines leave toxic waste behind; operators must safely rehabilitate the sites or risk leaving our community with the dangerous consequences,” said Tracey Anton, spokesperson for Friends of Latrobe Water.

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