Greens to banks: Just say no to coal
Environmental group tells big financiers to stop funding dirty power plants.
NEW YORK (CNNMoney.com) -- Fueled by climate change concern and a Texas utility's recent scrapping of several "dirty" power plants, one environmental group is looking to cut funding for new coal fired power plants at the source: the big banks.
San Francisco-based Rainforest Action Network says there are plans for 150 new coal power plants in the next few decades with a price tag of over $125 billion, so it's asking the banks that give loans to utilities - specifically Citigroup (Charts, Fortune 500), J.P. Morgan (Charts, Fortune 500) and Bank of America (Charts, Fortune 500) - to pull the plug on financing.
"If these plants get built, we're in serious trouble in terms of climate change," said Rebecca Tarbotton, global finance campaign director for Rainforest Action Network. "The banks are positioning themselves as climate leaders," so now, she says, "they need to take leadership."
If the new plants do get built, they'll spew 585 million tons of carbon dioxide into the atmosphere every year, according to Tarbotton. That's about 10 percent of the nation's total carbon emissions from energy in 2006, according to the Energy information Administration. Carbon dioxide is one of the principle greenhouse gasses that scientists say are responsible for global warming.
Rainforest Action's push comes after buyers of TXU, a big Texas utility, decided earlier this year to cancel 8 of 11 proposed coal-fired power plants, reportedly due to fears of raising the ire of the environmental community.
Tarbotton says her group has met with Citigroup, J.P. Morgan and Bank of America, who have all been receptive to the idea of cutting funding, but have so far not made any commitments.
If they don't play ball, however, Tarbotton says the environmental group can use its expertise in running public awareness campaigns - using tactics from newspaper ads to picketing a company's headquarters - to try and influence everyday customers.
"People don't want their money used to finance the dirtiest form of energy," she says.
But Rainforest Action probably wouldn't have much luck in running a traditional boycott, says Monroe Friedman, a psychology professor at Eastern Michigan University and author of the book "Consumer Boycotts: Effecting Change Through the Marketplace and the Media." In this age of information overload, he says it's just too hard to get the message out, and people are just too busy.
But, Friedman noted, the group might be successful in getting media attention (witness: this article), and that could prod the banks into action.
"The company is saying 'we're associated with good things' and the media is essentially saying 'you're lying,'" he says. "That's a concern."
J.P. Morgan, Bank of America and Citigroup did not return calls seeking comment.
Filling the energy gap
Electricity use in this country is expected to surge 40 percent by 2030, according to the EIA. If the campaign is successful and no new coal plants are built, where will the power come from?
If the $125 billion currently slated for new coal plants is spent on conservation efforts, Tarbotton says the nation's electricity demand would be reduced by 19 percent by 2025. (It should be noted that EIA's calculated 40 percent increase is based on current policies and excludes the effect things like a carbon tax would have on energy use, although it does include conservation measures that have been passed to date.)
Some experts agree with Rainforest Action and say greater efficiency, along with more investment in renewable energy, would satisfy the nation's growing thirst for power.
"Their assessment is right," Dan Kammen, a professor in the Energy and Resources Group at the University of California Berkeley. "But it will require more clean generation, not just efficiency."
The utility industry disagrees.
"We don't believe the projected demand can be met through renewables and conservation," says Jim Owen, a spokesman for the industry association Edison Electric Institute. "We're going to need new, large baseload capacity."
Owen says banning coal before renewables can make up for more output would simply cause utilities to build more natural gas facilities, which are more expensive to run.
"It's going to drive up the cost of electricity," he says. If successful, he believes, the campaign could even result in power outages.
He agrees that using less energy and bringing more renewables into the mix is a good idea, but that exerting public pressure on utility funding isn't the best way to accomplish it.