THE BLOG

Scrambling to Keep Up

03/05/2007 04:29 pm ET | Updated May 25, 2011

San Francisco, CA -- It's a breathless time. There is more dynamism to the struggle for a new environmental future than at any time I can remember since the very early 1970's -- more even than in the 1988-1990 spurt. Immediately after the November elections, the Sierra Club determined that influencing capital markets -- moving their focus from the energy past to the energy future -- was our key strategic imperative in the fight to lick global warming. In mid-December at a Sierra Club strategy symposium on global warming, Duke Power head Paul Anderson and venture capitalist Vinod Khosla assured us that if capital markets believed that limits on carbon emissions were inexorable, and that those who continued to emit would pay for the carbon emissions they put out, that financial priorities would shift even in the absence of any concrete Congressional action.

Boy were they right! While Congress has announced a lot of hearings, and some very good legislation is in the hopper, it's far from clear that this Congress is going to persuade the President to sign visionary and effective economy-wide global warming legislation. We hope so, but it's going to be a big struggle, and it's likely to drag on into 2009. But already Wall Street is responding. The decision by the private equity bidders for TXU to announce cancellation of eight of the eleven pulverized coal plants the utility was seeking permits for in Texas was the first big sign, and it's pretty clear that, even without the buy-out, TXU was getting ready to scale back its coal plans.

Then the State of North Carolina forced Duke power to cancel 50% of its proposed coal expansion at Cliffside. In New Mexico, $85 million in proposed tax breaks for the Desert Rock coal plant were killed. An appeals court in Missouri ruled that the State Public service Commission had run roughshod over the public review process to approve a giant coal plant proposed by Kansas City Power and Light, reopening the Sierra Club's legal challenge to the plant. "We are ecstatic, today's decision is a victory for open government, ratepayers and the environment," said Melissa Hope of the Missouri Sierra Club. "KCP&L tried to do something outside of the public process to gain approval to build an expensive and dirty coal-burning power plant." In the wake of these announcements, King Coal took a huge beating on Wall Street. One analyst called it "a blood bath" for the coal companies. Peabody Coal stock plummeted. The financial press sounded a huge warning for investors about the future of coal. Reuters reported that "the future of coal-fired power plants is seen so tied up by legal challenges from green groups, that it could slow, or even thwart, plans to use America's abundant coal supplies to generate its growing electricity needs." Fortune reported that "Coal plants get burned":

These are troubling times for any company trying to build a coal-fired power plants - and more than 150 of them are being planned across America. Opposition is mounting to coal plants because they contribute to global warming. The plants are getting harder to build because activist groups try to stop them, causing delays that raise operating costs. And investors are paying attention. Federal regulation of carbon emissions, which is being actively considered by Congress, could also make burning coal more expensive.

"Wall Street is every day becoming more aware of the risks of building new coal plants - both the carbon-cost risks and the reputation risks," says Dan Bakal, director of electric power programs for CERES, a coalition of environmental groups and institutional investors.

It's only a few months since Vinod Khosla and Paul Anderson assured us that Wall Street could move faster than Congress. How much faster I would never have dreamed.