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Feb 05, 2008 07:40AM
February 4, 2008, 9:45 am

Wall Street Tells Big Coal: Not So Fast

Posted by Jeffrey Ball

Investors like certainty – and if they aren’t going to get it from Washington, they’ll try to impose it themselves.

That’s one lesson from today’s announcement, first reported in the WSJ, that three big Wall Street investment banks are rolling out a new set of environmental standards to tighten their financing requirements for coal-fired power plants in the U.S.


Mohave Generating Station (Wikipedia)

Citigroup Inc., J.P. Morgan Chase & Co., and Morgan Stanley say they expect a federal greenhouse-gas-emissions cap in the next few years that will make conventional coal-fired power plants riskier investments. Given that no one knows exactly what such a cap will look like, the banks say they’ll make some conservative assumptions as they screen power-plant financing requests starting now.

We’ve talked before about how uncertainty about U.S. global-warming policy is forcing changes within industry. Now the banks are mobilizing. Under their new “Carbon Principles,” the banks will require companies applying for coal-fired power-plant financing in the U.S. to show they’ve first looked at energy-efficiency and renewable-energy options and found them insufficient. As for proposed coal-plants themselves, the banks want to see evidence either that the plants are being designed to be able to capture and store underground their carbon-dioxide emissions down the road, or that the plants will be able to charge high enough electricity rates to pay for the extra emission allowances they’d need to keep coughing out CO2 under an emissions cap.

Wall Street’s new carbon screen clearly will make it tougher to finance conventional coal-fired plants in the U.S. How hard is, well, up in the air. The banks’ bid for investment certainty rests on two big uncertainties: when the technology to capture and “sequester” power-plant CO2 emissions will be ready for prime time, and whether the power industry will have to pay for its emission allowances under a U.S. cap or will get them handed out for free.

As last week’s decision by the Department of Energy to effectively nix the FutureGen clean-coal research effort showed, it’s far from clear how to solve global warming by burying it. And though Wall Street may want to assume for the sake of conservative planning that the utility industry will have to buy all its emission allowances under a federal greenhouse-gas cap, coal-fired power producers are lobbying to be given their allowances by Uncle Sam — an arrangement that would help protect coal.

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Silverado Gold SLGLF can produce “liquid green fuel” from coal… with no CO2 emmissions. check them out.

Comment by garland hatch - February 4, 2008 at 10:46 am

Coal is such a big part of our energy pie, and we don’t have to buy it from the Middle East, in fact we hire Americans to mine and refine it. Now, the global warming alarmists, want to make coal-fired electricity way more expensive, with CO2 capture. The coal to liquid fuel does remove much of the real toxic compounds, mercury and others, so polution is already headed way down. It is just the GW folks who want to control the global economy through a global government mandate. This has nothing to do with saving the polar bears.

Comment by jack kreg - February 4, 2008 at 12:39 pm

Where is all the talk about nuclear? If these warming alarmists really want to quit burning oil, then convert all of our power plants to nuclear. That would also, cut our imports of oil from the Middle East, by half. If the USA cut oil imports from the ME in half, the price of oil would collapse. Then, the price of gas for our cars would drop back to $1.00/gallon. Then, use a national program to solve the problem of storing the spent nuclear fuel. Mandate that all states that consume electrical energy, must store or recover a proportional share of the nuclear fuel. The fuel can be recovered, but Carter shut down the effort to commercialize the process. We can have cheap and clean electricity from nuclear power, but this is not what the GW alarmists want, they want to control the global production of energy, and eventually the global economy.

Comment by jack kreg - February 4, 2008 at 12:48 pm

I hope they start looking at Mountain top removal also. I do not know if this is more local banks or the the big lending institutions

Comment by Larry - February 4, 2008 at 8:24 pm

One possible solution: Growing fat algea in combination with coal fired plants will be one big solution for the future.
The good thing is, that already existing plants can be integrated. Fat algeas need a lot of CO2 for growing and they are producing the raw material for “green fertilizer” and fat.
The fat can be converted through a process called LIPOCAL into a defined diesel with less emissions then the already existing Diesel at the pump.
Timeframe for industrial use = approx. 3-5 years.
Several huge companies are working at this invention.
A combination of several patents in that field are in a pre industrial trial in germany to enhence the developing time.
If the banks/investors would be more agressive to foster those inventions the solution would be there faster…
www.agreencross.org

Comment by Helmut Schneider from American Green Cross - February 5, 2008 at 2:41 am

Unfortunately, about 50% of electricity generation in the U.S. is from coal - converting that to nuclear (which we should do) won’t have much of an impact on oil prices. What will is reducing transportation fuel consumption through vehicle efficiency improvements, alternative fuels and electric vehicles, etc. Increasing nuclear by itself won’t help reduce oil prices.

Comment by Ned - February 5, 2008 at 11:17 am
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