US Update
Published by MAC on 2006-12-15
US Update
Green Group Asks Banks not to Fund TXU Coal Plants
PlanetArk US
15th December 2006
NEW YORK - An environmental group Thursday called on banks worldwide not to finance TXU Corp.'s project to build 11 new coal-fired plants in Texas.
It is the latest in a string of challenges to TXU expansion plans by environmental, community and business groups concerned that the pulverized coal plants will dirty Texas' air and spew greenhouse gases into the atmosphere.
The Rainforest Action Network (RAN) said it sent letters asking 54 financial institutions not to participate in lending TXU US$11 billion to fund construction of the plants.
According to RAN, the plants will produce 78 million tons of new carbon dioxide emissions per year, greater than the greenhouse-gas emissions of 21 US states or the entire emissions reduction commitment of Japan under the Kyoto Protocol.
Scientists believe that carbon dioxide and other greenhouse gases cause global warming.
"The world's financial institutions can prevent this project from ever leaving the ground by simply declining to be a part of it," RAN said in a statement.
But TXU defended its program, arguing that Texas needs new power plants to meet rising electricity demand and that the new plants will be built with the latest environmental controls.
TXU said in June it had secured a commitment for US$11 billion of bank loans to fund the construction of the plants, with Citigroup Inc., Morgan Stanley and Merrill Lynch & Co. the three lead arrangers for the funding.
Some loan commitments allow banks to provide financing only if they can find other banks and institutions to share the risk of the loans, while others require the banks to shoulder the load themselves if they cannot find partners.
It was not immediately clear under what terms the banks have agreed to provide financing to TXU.
Citigroup and Merrill Lynch declined to comment. Morgan Stanley also had no comment on the TXU financing, but a spokesman said the bank was currently revising its environmental policy.
"We take this issue very seriously," he said.
Story by Lisa Lee
REUTERS NEWS SERVICE