Another big investment bank adds CO2 emission standards to financing of coal-fired power plants

Last week, we mentioned that three major investment banks — Citigroup, J.P. Morgan and Morgan Stanley — had tied carbon-dioxide emissions standards to their financing of coal-fired power plants, anticipating the first federal limits on CO2. Bank of America has become the latest lender to show it is bracing for a cap on emissions, reports Environmental Capital, a blog of The Wall Street Journal.

"Bank of America says it has decided to start factoring a cost of carbon-dioxide emissions into its decisions about whether to underwrite debt for new coal-fired plants," Jeffrey Ball writes. "Specifically, the bank says it anticipates a federal cap that would require a utility to pay between $20 and $40 for every ton of CO2 its power plants emit. Today in Europe, which already has imposed caps, a permit to emit a ton of CO2 is trading at about $29."

Ball adds that time will tell how these banks actually implement these promises, because the dilemma is not so simple for them. Bank of America chief executive Ken Lewis emphasized that Tuesday when he said, "It will take time to make this shift happen. In the meantime, I’d like to keep the lights on." (Read more)