{"id":379,"date":"2008-02-04T18:46:34","date_gmt":"2008-02-04T23:46:34","guid":{"rendered":"http:\/\/blogs.edf.org\/climate411\/2008\/02\/04\/banks_and_coal\/"},"modified":"2008-02-04T18:49:49","modified_gmt":"2008-02-04T23:49:49","slug":"banks_and_coal","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/climate411\/2008\/02\/04\/banks_and_coal\/","title":{"rendered":"Banks Consider Risks in Financing Coal Plants"},"content":{"rendered":"<p><img src='https:\/\/blogs.edf.org\/climate411\/wp-content\/blogs.dir\/7\/files\/2008\/02\/mark_brownstein.png' alt='Mark Brownstein' class=\"blogAuthorPic\" \/><i>This post is by <a href=\"http:\/\/environmentaldefense.org\/page.cfm?tagID=869\">Mark Brownstein<\/a>, Managing Director of Business Partnerships&nbsp;at Environmental Defense.<\/i><\/p>\n<p>A little over a year ago, Environmental Defense, the Natural Resources Defense Council (NRDC), and Ceres sent a letter to the three lead banks financing the <a href=\"https:\/\/blogs.edf.org\/climate411\/2007\/02\/27\/txu_buyout\/\">TXU deal we helped broker<\/a>. We said the banks no longer could ignore CO<sub>2<\/sub> in their investment decisions.<\/p>\n<p>Today we are seeing the culmination of this effort. The three banks &#8211; Citigroup, J.P. Morgan Chase, and Morgan Stanley &#8211; have announced that they will require utilities seeking financing to prove the new plants would be economically viable under an expected <a href=\"https:\/\/blogs.edf.org\/climate411\/2007\/10\/18\/lieberman-warner_bill\/\">federal cap on greenhouse gas emissions<\/a>.<\/p>\n<p>This will make it much harder for utilities to build conventional coal plants.<\/p>\n<p><!--more--><\/p>\n<p>The banks, in consultation with Environmental Defense, NRDC, and some leading power companies, developed three Carbon Principles to manage the risk in financing utilities: <\/p>\n<p><b>The Carbon Principles:<\/b><\/p>\n<ul>\n<li><b>Energy efficiency<\/b>. The banks will encourage clients to invest in cost-effective demand reduction through energy efficiency. Demand reduction will be considered in financing new fossil fuel generation.<\/li>\n<li><b>Renewable and low-carbon energy technologies<\/b>. The banks will encourage clients to invest in cost-effective renewable energy and distributed technologies. Production increases from renewable and low-carbon energy generation will be considered in financing new fossil fuel generation.<\/li>\n<li><b>Risks in fossil fuel generation<\/b>. Due to evolving climate policy, investing in CO<sub>2<\/sub>-emitting fossil fuel generation entails uncertain financial, regulatory, and environmental liability risks &#8211; for example, the cost of purchasing carbon credits. Banks will assess and reflect these risks in financing new fossil fuel generation.<\/li>\n<\/ul>\n<p>In addition to the Principles, the consortium has developed an Enhanced Due Diligence framework to help lenders better understand and evaluate the carbon risks associated with coal plant investments.<\/p>\n<p>The Carbon Principles and Enhanced Due Diligence framework are a good first step in assessing electric generation options in light of the pressing need to substantially reduce national greenhouse gas pollution. But they are only a first step.<\/p>\n<p>If the banks thoroughly implement the Enhanced Due Diligence process and act on their findings, we will see a change in the direction of investments. In fact, all financial institutions should be using these Carbon Principles and Enhanced Due Diligence framework.<\/p>\n<p>But even if the Principles and framework become business-as-usual, we will not have gotten where we need to go. To stop global climate change, we must have federal legislation that caps carbon emissions.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This post is by Mark Brownstein, Managing Director of Business Partnerships&nbsp;at Environmental Defense. A little over a year ago, Environmental Defense, the Natural Resources Defense Council (NRDC), and Ceres sent a letter to the three lead banks financing the TXU deal we helped broker. We said the banks no longer could ignore CO2 in their &#8230;<\/p>\n","protected":false},"author":80,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[20],"tags":[],"coauthors":[],"class_list":["post-379","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Banks Consider Risks in Financing Coal Plants - Climate 411<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.edf.org\/climate411\/2008\/02\/04\/banks_and_coal\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Banks Consider Risks in Financing Coal Plants - Climate 411\" \/>\n<meta property=\"og:description\" content=\"This post is by Mark Brownstein, Managing Director of Business Partnerships&nbsp;at Environmental Defense. 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