Guest blogger Jim Marston is an attorney, and the Director of the Energy Program in the Texas Office of Environmental Defense.
Who would have thought that, almost a month to the day after the USCAP initiative was announced, coal-enamored TXU would come on board? But today’s big news is victory in Texas, thanks to an unusual buyout agreement.
The firms buying TXU – Texas Pacific Group and Kohlbert Kravis Roberts & Co (KKR) – reached an agreement with Environmental Defense and the Natural Resources Defense Council to significantly scale back TXU’s coal plant building plan, and adhere to a strict set of environmental standards:
- Terminate TXU’s previous plans to expand coal operations in other states.
- Endorse the U.S. Climate Action Partnership (US CAP) platform, including the call for a mandatory federal cap on carbon emissions.
- Reduce the company’s carbon emissions to 1990 levels by 2020.
- Promote Demand-Side Management programs to reduce energy consumption.
- Double the company’s expenditures on energy efficiency measures.
- Double the company’s purchase of wind power.
- Honor TXU’s agreement to reduce criteria pollutants in Texas by 20% (TXU’s 20% pledge was contingent upon approval of all 11 plants).
- Establish a Sustainable Energy Advisory Board on which I will serve.
The wheels started turning on this landmark agreement less than two weeks ago, when Environmental Defense president Fred Krupp received a phone call from former E.P.A. administrator William K. Reilly, who is advising Texas Pacific Group. Fred sent me to California to manage the negotiations for Environmental Defense.
This is a sweet victory after our bitter 10-month battle to stop TXU. It’s also a landmark event in the effort to stop global warming. This will not only be the biggest leveraged buyout ever, it is the only buyout in history made contingent on the approval of environmental groups.
News of the TXU buyout and its commitment to environmental measures is all over the news – including the blogosphere. Our favorite comment so far comes from David Roberts on Gristmill:
Who did the equity firms approach about making the project environmentally acceptable? NRDC and Environmental Defense. Green groups like these get grief from hardcore enviros because they work closely with business and favor market-based solutions. They get grief from the Reaper crowd because they’re stodgy and technocratic and not hip to the new Apollo Alliance-style “framing.” But who’s making things happen?
I don’t think of myself as stodgy, but I’ll take the compliment!
7 Comments
As I read the agreement, The company will still be able to build three more coal plants. How much CO2 will be emitted from those plants? What kind of technology is KKR going to use on building the coal plants? gassification?
We don’t yet know what technology will be used for the three new plants. If they are the standard pulverized coal plants it will mean an extra 21 million tons of CO2 per year. But by stopping the construction of 8 others we prevented the emissions of 57 million tons of CO2 per year.
Moreover, (1) TXU has committed to lowering their emissions to 1990 levels by 2020 – in other words, TXU will significantly lower emissions regardless of the type of plants they build; and (2) TXU will work to pass a national cap on greenhouse gas emissions which will make their pledged reductions mandatory.
If you ask me that’s a pretty good package.
Note that we are not a party to, and thus have not agreed to, allowing the Oak Grove permit (for two of the units) to go forward. That decision is the responsibility of the Robertson County, Our Land, Our Lives local group, who is the party opponent in that permit proceeding.
what about this…..
[The buyout] doesn’t resolve the fundamental environmental problems that made the huge fleet of proposed coal plants so controversial across the state and the nation. Solving those would require a longer effort to make basic changes in how Texas deals with energy and the environment.
Texas will still be the largest emitter of GHG, and the deal might make it harder to fight ongoing battles with existing plants and permits in other areas.
Local battles over the three remaining new TXU coal plants and five others that other companies still could build in Texas will continue as well. In particular, TXU’s proposed two-unit Oak Grove facility in Robertson County is the subject of a permit fight before the Texas Commission on Environmental Quality.
Oak Grove’s two units and a new unit at TXU’s Sandow plant in Milam County are the only ones the company proposed that would burn Texas lignite, the most-polluting form of coal. The others would have burned cleaner Wyoming coal. Opponents said they would continue to fight the Oak Grove permit. But Dallas Mayor Laura Miller, who is leading a coalition of cities against the new TXU plants, said the TXU deal could make it harder to defeat that plant.
Nothing in our praising of the new buyer’s commitments to curb global warming changes the legal status of the opposition to Oak Grove. We are not the party opponent to those plants, and did not and could not compromise anyone else’s legal rights.
Early in the coal fight in Texas, before we had many resources for legal fights, the environmental groups coordinated opposition and divided the permits among the groups. Environmental Defense took the lion share of the permits to oppose, but another group (Robertson County, Our Land, Our Lives) agreed to lead on Oak Grove.
Frankly, we and the Public Citizen group tried to get mayors from cities like Dallas to act earlier, but they did not act to oppose coal plants until the Oak Grove application was through the “State Office of Administrative Hearings” process.
The Our Land, Our Lives group continues in the same legal position as before. I have now explained this to Mayor Miller of Dallas, who is not an attorney, and she seems to understand that the TXU deal does not and could not make it harder to defeat the Oak Grove plant.
So what do you think of the article in the Wall Street Journal, “TXU Sheds Coal Plan, Charts Nuclear Path” By Rebecca Smith
TXU Corp. has scrapped plans to build a large fleet of coal-fired power plants in Texas but hasn’t altogether abandoned its expansion efforts. Instead, it hopes to build the biggest nuclear-power plants in the U.S.
TXU has shifted its focus to nuclear power at a time when three other organizations — NRG Energy Inc., Exelon Corp. and Amarillo Power — have said they, too, may build nuclear plants in Texas. If all the plans materialize, Texas could have more reactors than any other state in a decade’s time, built in a deregulated market where missteps would be borne by shareholders …
It is indeed ironic that the environmental victory of preventing TXU from building eight CO2-spewing coal-fired power plants has led TXU to propose building two nuclear power plants. Nuclear power creates negligible greenhouse gas emissions, but raises other critical concerns such as safety and disposal of waste.