Major banks tie environmental standards to financing for coal-fired electric generating plants

The first wave of tougher environmental standards for coal-fired power plants is coming from Wall Street, not the federal government. If companies want private financing for coal-fired power plants, they must show they are ready for whatever limits on pollution could be coming, reports Jeffrey Ball of The Wall Street Journal.

"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," Ball writes. "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."

About half of the electricity in the United States comes from coal, and these standards would apply to "all but the smallest plants," Ball reports. The banks want to make sure their investments won't be jeopardized if plants must spend more to upgrade emissions-capturing technology or to buy extra pollution allowances under a cap-and-trade system. Ball explains that the banks' standards came from negotiations with some major utilities and environmental groups. More than anything, the new standards would make building conventional coal-fired practical only if the utility could raise rates enough to offset the cost of pollution. (Read more)