Bottom-Line Thinking Says “No to Coal”

The recent $45 billion buyout offer accepted by TXU Corporation, a large Texas based utility, is sending a wakeup call as big as Texas throughout the utility, financial, political, and environmental communities.  The epicenter of the shock waves is the agreement the buyers struck with environmentalists to pull the plug on plans to build 8 of 11 new proposed coal burning power plants in Texas.  It’s no longer business as usual for utilities or their monied backers.  Let’s hope this deal is the beginning of the end of the push to build new coal burning power plants.  We’ve got a fighting chance if the smart money is saying NO to COAL.

They say football is a game of inches.  On Wall Street the measuring sticks are marked with dollar signs.  Financial winners have to minimize the risk of loss and maximize the rate of return in order to score.  Don’t think for one minute that this buyout is just some altruistic, let’s do good for the environment, kind of thing.  No, it’s about money.  You can bet the buyers – private equity firms Texas Pacific Group and Kohlberg Kravis Roberts, and investment banker Goldman Sachs – sharpened their pencils and looked closely at how smart is it to keep generating electricity the old fashioned way – by burning coal.  Apparently these investment heavy hitters have realized the risk of investing in old technology has gone up and the potential reward has gone down.  In other words the environmental damage created by burning coal, namely global warming, presents a clear and present financial danger.

It’s a new game.  Let’s hope Kansans are tuned in to the emerging new energy paradigm.  The new paradigm is pointing us toward 21st century energy solutions.  Among the most important elements shaping our new energy future is (1) the falling cost of twenty-first century renewable energy technology, (2) a likely carbon cap-and-trade system and/or tax on carbon emissions that will make it more expensive to burn fossil fuels, and (3) the profit potential of energy efficiency.  If nothing else, the TXU deal gives us guarded hope that financial prudence and environmental sustainability don’t have to be at the opposite ends of melting polar icecaps.

We can be hopeful but let’s not get comfortable.  There remain 151 coal burning coal plants on the drawing board according to the DOE.  We can hope the shock waves from this one event will create a sea change that will cause utilities and investors to back away from building those 151 remaining proposed coal plants.  It won’t be easy.  There’s plenty of “dirty money” floating around looking for the path of highest return and least environmental resistance.  Therefore, we must do everything we can to stop every single new coal burning power plant – period.  Kansans must urge Governor Sebelius, legislators, Kansas Corporation Commission, and our utilities to pull the plug on all proposed coal burning power plants.  Bottom-line, there is a smarter way!

One final thought: the quickest way to stop the construction of new coal burning power plants is to cut electricity demand through energy efficiency.  Fortuitously, energy efficiency creates financial benefits that are good for Wall Street and Main Street.  (Check out the Kansas Chapter’s No Sweat Action Guide to Stop Global Warming in this issue for easy ways to cut electricity demand.)

Frank Drinkwine, Kansas Chapter Conservation Committee Chair

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