Green groups strut their stuff on Wall St.

NEW YORK (CNNMoney.com) -- Before announcing the biggest buyout on record, the private equity buyers of utility TXU Corp. came calling on environmental groups, the latest sign of how the green lobby is increasingly shaping the agenda on Wall Street.

Dallas-based TXU Corp. (Charts) said Monday it agreed to be taken over by famed buyout firm Kohlberg Kravis Roberts, Texas Pacific Group and the private equity arm of Goldman Sachs for a record $45 billion.

As part of the deal, the private equity owners agreed to abandon plans for eight of 11 controversial coal-fired power plants that TXU previously had aggressively sought, winning support for the buyout from two major environmental groups - Environmental Defense and the National Resources Defense Council.

Critics who had howled at TXU's initial plan to build 11 plants powered by coal hailed the decision as a victory, saying it would prevent 56 million tons of carbon emissions a year.

"The buyout and turnaround of TXU's position on global warming is an earthquake that happened in Texas, but shock waves are going to be felt from Wall Street to Washington," Dave Hawkins, director of the Natural Resource Defense Council's Climate Center, said on a conference call Monday afternoon.

In addition to revising its coal plant strategy, TXU Corp. has pledged to support programs that regulate carbon emissions.

The company said it aims to join USCAP, a coalition of businesses and environmental groups that seeks legislation that cuts greenhouse gas emissions. Members of USCAP include GE (Charts), Alcoa (Charts) and Lehman Brothers (Charts).

It also will invest $400 million over the next five years in conservation and energy efficiency.

Climate change has become a hot-button issue in the wake of a recent United Nations report that said with very high confidence that humans are contributing to global warming and the success of Al Gore's film "An Inconvenient Truth" - which took home an Oscar for best documentary the night before the TXU deal was announced.

Lawmakers on Capitol Hill are assiduously crafting legislation aimed at reducing harmful carbon emissions, and big business is waking up to the fact that global warming is a serious issue that has implications for their strategy, said Eric Kane, an analyst with research firm Innovest Strategic Value Advisors.

Any company even considering building a coal plant is going to be evaluating the long-term costs of operating such a plant. Consequently, "it is becoming increasingly common for utilities to be at table with environmental groups and stakeholders in general," he said.

The about-face by TXU shows that a turning point has been reached in the battle over climate change, said Tom Smith, director of the Texas office of Public Citizen, a public interest watchdog.

"The message going out to every other utility is the times have just changed," he said.

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