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How Environmentalists Shaped TXU Deal
(audio and text)
Morning Edition, National Public Radio
Environmental advocacy groups were called in to help structure the deal for TXU Corp., the Texas electrical utility. Fred Krupp, president of Environmental Defense, speaks with Steve Inskeep about the process of winning environmental commitments from TXU’s suitors.

Q: What was it that you were pressing TXU to do, or not to do?

A: We were unhappy, initially, that they had suggested building 11 new [coal power] plants, which would have put 78 million tons of additional carbon dioxide into the atmosphere. That is a tremendous amount of carbon pollution.

…Q: I assume that TXU was planning 11 new power plants because they made a decision that the demand was there and that people needed more power generation. How are they going to get the power?

A: They are going to double the amount that they spend to purchase wind power. And they’re also going to double the amount they spend on energy efficiency.

This is becoming a new model, where utilities are understanding that they can make money by helping customers save energy.

Q: Are those steps enough to roll back the amount of greenhouse gas emissions, just more efficiency and more wind power?

A: I think they’re going to go a long way. There will be other steps as well the company needs to take. And we’ll be working with them on an advisory board.

But there’s probably no one silver bullet. There’s probably a whole lot of silver buckshot that needs to be deployed by this utility, and others as well.
(27 Feb 2007)

A Green Deal on Coal

Editorial, NY Times
People who worry about global warming and want the United States to do more to reduce greenhouse gas emissions received some very good news over the weekend from a very unlikely source. As part of an ambitious buyout deal, TXU, a Texas utility that has long been a target of environmentalists, will abandon plans to build eight old-style coal-burning power plants, which would have dumped huge amounts of carbon dioxide into the atmosphere.

The buyers – two private equity companies, Kohlberg Kravis Roberts and the Texas Pacific Group – also agreed to invest $400 million to help their customers use energy more efficiently, and to explore cleaner ways to burn coal. In a gesture of potentially broad political consequence, they pledged to join other forward-looking companies in backing federal legislation imposing mandatory limits on emissions of carbon dioxide, the main greenhouse gas.

The deal represents a shrewd reading of the political waters by the new owners. TXU had come under heavy fire from influential members of Congress, the courts and even the local citizenry. The companies also knew that plants using older technologies and producing heavy emissions could be severely penalized if Congress ever chose to regulate carbon dioxide. It also helped that Texas Pacific’s co-founder, David Bonderman, is himself an ardent environmentalist who was willing to reach out to TXU’s opponents, including influential environmental groups, for their help in negotiating a deal.

Though the deal could be trumped by another offer, it is already being hailed as a pivotal moment in the fight against global warming. We shall see. It is certainly further evidence that the capital markets are becoming increasingly sensitive to the climate change issue. But the country and the environment cannot depend on good sense or even good business sense to persuade other corporate leaders to follow Kohlberg Kravis Roberts and Texas Pacific. Congress needs to move briskly toward legislation that would put a price on carbon, either by taxing it or capping emissions.

The Energy Department says there are 159 new coal-fired power plants on the drawing boards; of these, only 32 are considering – though not committed to – technologies that could significantly reduce carbon dioxide emissions. What’s needed is federal legislation that would drive them in the direction TXU’s new owners have promised to take.
(28 Feb 2007)

Top scientist seeks halt on coal plants

Seth Borenstein, Associated Press
One of the world’s top scientists on global warming called for the United States to stop building coal-fired power plants and eventually bulldoze older generators that don’t capture and bury greenhouse gases.

But 159 coal-fired power plants are scheduled to be built in the next decade or so, generating enough power for about 96 million homes, according to a study last month by the U.S. Department of Energy.

Burning coal is one of the major sources of carbon dioxide, the chief greenhouse gas causing global warming.

In prepared remarks to be delivered at the National Press Club Monday afternoon, NASA scientist James Hansen, who has been one of the earliest top researchers to warn the world about global warming, will call for a moratorium on building new coal-fired power plants.

Hansen’s call dovetails with an edict by the private equity group buying TXU, a massive Texas-based utility. The equity group, led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group, agreed to stop plans to build eight new coal-fired power plants, not to propose new coal-fired plants outside Texas and to support mandatory national caps on emissions linked to global warming.

Hansen’s presentation to the press club says all coal-fired power plants that do not capture and bury carbon dioxide “must eventually be bulldozed (before mid-century).”
(26 Feb 2007)
Also carried by Business Week.