The Michigan Messenger

Proposals for new coal power plants in Michigan face not only opposition from environmentalists but also tough new requirements from the banks they need for financing. Now that it’s clear that all the top contenders for the U.S. presidency favor addressing climate change, banks have developed a new set of guidelines that require energy intensive projects to factor in carbon costs.

Last month three of the world’s largest financial institutions — Citigroup, JPMorgan Chase and Morgan Stanley — released “The Carbon Principles,” guidelines that require companies seeking funds for coal plant development to plan for the potential future cost of carbon dioxide (CO2) releases. The guidelines also require that efficiency measures be considered when making projections about future demand.

Despite a focus by governor Jennifer Granholm on renewable energy, battles over renewable energy standards, efficiency measures and consumer choice are dragging on in the Legislature. Meanwhile, the cost of coal is rising and Michigan, which has lost much industrial activity in recent years, has had its projected need for base load power revised downward by the Public Service Commission. The Carbon Principles may further slow development for the five coal power plant projects that have sought permits from the state in the last year.

Continued – Wolverine Power is in the beginning stages of developing a 600-megawatt, coal-fired power plant near Rogers City. Spokeswoman Nancy Tanner said that she is not sure how the new guidelines will affect Wolverine’s plans and that the company is still negotiating financing for its planned plant.

The regulatory climate for coal plants is now “clear as mud,” Tanner said, and the Carbon Principles do not make matters simpler.

Consumers Energy is planning to construct an 800-megawatt coal plant near the mouth of the Saginaw River.

Spokesman Jeff Holyfield said the new guidelines present no surprises for Consumers Energy because the company helped draft them. Still, he said, the plant development process has uncertainties and engineers are warning that they may already be behind on plans to construct the plant by 2015.

“The days of `business as usual’ for coal are over,” said Mark Brownstein, managing director of business partnerships for the Environmental Defense Fund.

“Project developers and their investors can no longer claim that carbon dioxide pollution doesn’t matter,” Brownstein said in a statement. “These principles are a first and important step in the transition to a lower carbon economy. Doing anything less than what these principles call for simply wouldn’t be prudent.”