Thursday, February 01, 2007

Coal too risky to finance?

A coalition of energy and environmental groups like Ceres and the Rainforest Action Network are calling on banks to reject loan requests for projects that will emit large amounts of global warming pollution, like carbon dioxide. So far, more than a dozen banks have signed onto the agreement and specifically took coal-fired power plants off their loan lists. For example, US Bank has committed to cut back all its funding of energy projects that emit lots of global warming pollution and hopes to show a 7 percent decrease in investments' harmful emissions.

Coal isn't just bad for the environment, but it poses economic risks as well. With impendingasking for some sort of regulation - new coal plants could end up costing customers a lot more on their utility bills.

The debate is playing out in Texas, where the utility TXU Corp. wants 11 new old-fashioned coal plants costing a total of $11 billion. The amount of global warming pollution they would release is about the same at 14 million extra vehicles. So far, three banks - Merrill Lynch, Citigroup, and Morgan Stanley - have agreed to arrange
federal carbon regulation - indeed, with many big businesses specifically TXU's financing.The coalition says that two banks from the Netherlands have committed to not invest in TXU's plants, and a spokesman for the Bank of Montreal also said it wouldn't get involved.

Some banks are being tested in the public eye, like Citigroup, which it financing the TXU project. But Citigroup has also signed onto the Equator Principles; a set of guidelines used to determine social and environmental risks of a particular project, When asked how all these coal plants could meet the Principles, Shawn D. Miller, Citigroup's director of environmental and social risk management, explained to the Boston Globe,
"Currently, if a coal-fired power plant in the United States receives its environmental permits, receives an OK from relevant environmental authorities, goes through a public commenting process that allows locally-affected people and civil society to give their own point of view, and goes through our internal and independent environmental and social review, then I think it is meeting a robust standard."
As Tim Greef, a global warming specialist with the National Resources Defense Council, put it,
"It is sort of like allowing [tobacco-maker] Philip Morris to claim they are fighting tobacco addiction by asking their own employees not to smoke, while continuing to sell cigarettes to everyone else."

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