The WSJ (subs. req’d) reports:
Three of Wall Street’s biggest investment banks are set to announce today that they are imposing new environmental standards that will make it harder for companies to get financing to build coal-fired power plants in the U.S.
Citigroup Inc., J.P. Morgan Chase & Co. and Morgan Stanley say they have concluded that the U.S. government will cap greenhouse-gas emissions from power plants sometime in the next few years. The banks will require utilities seeking financing for plants before then to prove the plants will be economically viable even under potentially stringent federal caps on carbon dioxide, the main man-made greenhouse gas.
Kudos to the banks and to Environmental Defense and the Natural Resources Defense Council for working with them to develop the standards. More from the story here:
The banks say they don’t want to be involved with debt that goes bad as a result of government emissions caps that require the power plants they finance to buy large numbers of extra pollution allowances. Under a cap-and-trade system to limit greenhouse-gas emissions, the government would distribute a certain number of emission allowances each year. Companies whose emissions exceeded their allowances would have to buy more from companies that had more than needed. Congress is considering several cap-and-trade proposals.
“We have to wake up some people who are asleep,” says Jeffrey Holzschuh, vice chairman of institutional securities at Morgan Stanley.
The banks are likely to continue to finance certain coal-fired power plants: those designed to capture greenhouse-gas emissions and shoot them underground if that technology became practical. But they make it less likely the banks will finance other coal-fired plants. Several dozen are on the drawing board in the U.S., many not yet financed….