Saturday, February 10, 2007

Don't they undertstand it is financially risky?

In Texas TXU are planning up to 11 new coal fired power stations.

Amongst people unhappy about this are environmentalists, christians, 
local people, some local politicians, a rock star and a film director.

And every other sane person on the planet. But when co2 emission regulations kick in they will be hit, so why are they taking the risk rather than investing in wind or energy efficiency?

More on the situation here. And also on this previous post with a video clip of some activists.

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At 9:56 PM, Blogger rafael said...

the problem is that US policy direction is still unknown. if the US pursues trading then the added co2 of TXU will become an asset to sell - ie: there's an incentive to create as much co2 as possible right now. the alternative is if co2 is taxed directly. only then is it a liability. TXU is pursuing short term cost benefit (at the expense of the planet)

At 12:05 AM, Blogger Calvin Jones said...

Rafael, what you are saying partly works if any future cap and trade scheme allocates emissions rights based on past emissions. This idea, known as grandfathering, formed the basis of the EU ETS in it's first phase. It is however, well known to be less efficient than simply auctioning the emissions credits. I don't know which system the US is more likely to persue; perhaps TXU do. But even if the system involved grandfathering, having lots of emissions wouldnt give them funds, only reducing them would...if reductions could be made cheaply then they could gain financially.

At 1:26 AM, Blogger jimroland said...

Grandfathering can make big profits, look at the recent bonanza for UK energy companies under the ETS. If you have a grandfathered allowance, then cap and trade will initially make you richer even as allowances are reduced, just as the sugar industry used to dump surpluses on the high seas so as to up their profits.


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