Coal-Based Abstinence While 'Hooking Up' With Renewables: New Wall Street Paradigm Emerging

Three Wall Street investment banks are imposing new environmental standards that will make it harder for companies to get financing to build coal-fired power plants. 'Loan applicants have to prove they are good for the long term under future climate mitigation regulations.' Which will dominate the financing of new electricity generation: coal fired; or renewables?
Citigroup Inc., J.P. Morgan Chase & Co. and Morgan Stanley say they have concluded that the U.S. government will cap greenhouse-gas emissions from power plants sometime in the next few years. The banks will require utilities seeking financing for plants before then to prove the plants will be economically viable even under potentially stringent federal caps on carbon dioxide, the main man-made greenhouse gas.

Underscoring the coal-abstinence point of view, the big banks (going for a big bang) are trying to make their portfolios recession-proof by directing large loans and investments into green technology.

Wall Street's JP Morgan JPM and Goldman Sachs GS and the big utilities have been buying up renewable energy companies in a scramble to get a piece of the record-breaking growth. More than a half-dozen firms have been taken private, including names such as Noble Environmental, Zilkha and Community Energy.

Creative_Greenius, who commented on an earlier guest post on TreeHugger, feels that this news, combined with the Federal Department of Energy recently backing away from support for the Illinois FutureGen project amounts to a major strategic defeat for Big Coal:- "This devastating news for the people who make their money as the biggest contributers to global warming is great news for the rest of us."

We're not so sure. There are several ways to finance a coal fired plant outside of what Wall Street can provide.

Besides, if Congress can be lobbied to keep the carbon cap sufficiently low (McCain-Lieberman cap and trade bill comes to mind), Big Coal can have it's cake and eat it too. This will most certainly be the next "K-Street" project to keep our eyes on.

And, there's no certainty that a new Presidential administration will work with Congress to restore USEPA's Mojo, enough that we'll see significant cut backs in mercury vapor and particulate emissions from coal fired facilities.

Finally, we really don't know the details behind this Administration stepping away from FutureGen at the very moment that the President asked for a few billion to spend on "Clean Tech" promotion in developing nations. Cognitive dissonance at best.

Just to sow more uncertainty about FutureGen decision making, here are some conspiratorial sounding hypotheticals:

Could the geologists have expressed last minute doubts about how impermeable rocks below Matoon IL really would be over the long term?

Was the design team up to the task? A quarterback run might have been the only choice for the project manager, if offense was crumbling under pressure.

Did "true conservatives" finally get fed up with paying a well-heeled industry to design something that they should have been supporting out of their own R&D; budgets? If so, more of that good conservative stuff for the nuclear industry please!

The Illinois FutureGen $2 billion, had it been finally approved as proposed for Illinois, could certainly have been viewed as big political bacon, brought home by Illinois Senator and Presidential Candidate, Barack Obama. Hard ball politics then?

Anyhow, we'll never know exactly which reasons drove the FutureGen pullback; and it doesn't much matter. Point is, the advocacy game has only begun. Way too early to declare a victory, regardless of your sentiments about the importance of coal fired power for the future.

What matters most is streamlining and bolstering every conservation program and renewable energy incentive program we can come up with, from Federal, State, and local levels.

Wall Street's new paradigm: all good so far.

Via:WSJ, Wall Street Shows Skepticism Over Coal AND MSN Money, "Renewable Energy Companies Thriving in Volatile Market" Image credit::H2H4U, HEART TO HEART Electronic Music RadioShow on, "Dominance Electricity"

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