Wall Street Shows Skepticism Over Coal

Banks Push Utilities
To Plan for Impact
Of Emissions Caps

By JEFFREY BALL
February 4, 2008; Page A6

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.

The move shows Wall Street is the latest U.S. business sector that sees some kind of government emissions-capping as inevitable. But it shows disagreement about what to do.

It also marks the latest obstacle to coal, which provides about half of U.S. electricity but emits large amounts of CO2. Citing costs, the U.S. government last week pulled support for a project called FutureGen that many utilities saw as a step toward burning coal cleanly.

The standards, which would apply to all but the smallest plants, result from nine months of negotiations among the three banks and some of the biggest U.S. utilities and environmental groups. The standards could hurt coal-dependent utilities that haven't begun factoring a future price of CO2 emissions into their planning. But they could help utilities that have.