That's what I'm wondering when I read this (In big buyout ...):
Under a proposed $45 billion buyout by a team of private equity firms, the TXU Corporation, a Texas utility that has long been the bane of environmental groups, will abandon plans to build 8 of 11 coal plants and commit to a broad menu of environmental measures, according to people involved in the negotiations.
The roster of commitments came through an unusual process in which the equity firms asked two prominent environmental groups what measures could be taken to win their support. The result is an about-face from the company’s earlier approach to climate-change issues, and includes a goal of returning the carbon-dioxide emissions by TXU to 1990 levels by 2020.
Here is the good environmental news:
TXU will discard plans to build eight of 11 proposed new coal plants, which would have been major new sources of emissions. Those plants — which would have added more than 9,000 megawatts of new capacity, the equivalent of 3.5 percent of the nation’s current coal-fired power — had been part of a planned $10 billion expansion of coal-fired electricity.
TXU, which is based in Dallas, also intends to expand the renewable energy portion of its portfolio and reduce or offset its emissions significantly, said people who were familiar with the plans.
But, hang on (Deal's Broader Effect ...):
The deal between environmental groups and the investors seeking to buy the TXU Corporation may stop that company’s construction of eight new coal-fired power plants in Texas, but may have hardly any effect on the broader course of new power plants being built, according to other participants in the battle over the Texas plants.
Huge new plants will still be built, experts say, because demand is rising and because new technology can use coal to make power more cheaply than natural gas plants or other alternatives. Stopping a new generation of coal plants will have to wait for government action on carbon dioxide, many of these experts say.
“There are eight other power plants proposed by other companies that are now prepared to move unto the battlefield,” said Tom Smith, an organizer with Public Citizen in Austin, Tex., who is a leading opponent of the TXU plan. Mr. Smith said that backers of the other eight plants had already filed for permits, “but they have not been moving forward because of the size of the TXU play.”
TXU had scared off some competitors by proposing eight plants, using the vast scale of the plan to cut down on engineering costs.
So, TXU has economies of scale (i.e., lower per unit costs as the scale of production increases) and their plan has such low costs that it eliminated some competition. Without the economies of scale, competitors can move in to the market. The big losers will be electricity consumers who'll pay higher prices (but maybe they'll consume less energy with higher prices?). Those who are hurt by the emissions neither win or lose since emissions won't change.
This scenario makes sense to me, especially after reading so often that renewable energy isn't ready to replace coal (fire up those comments!).
What to do? Carbon tax or cap-n-trade (it is starting to sound like a super hero ... get it? Captain America ... Captain Trade ...).
