Environmental controversy brews over TXU deal
Environmental controversy brews over TXU deal
mongabay.com
March 2, 2007
Initially hailed as a victory for the environment, the private equity deal to acquire Texas-energy company TXU Corp is now facing criticism from some green groups reports the Saturday issue of The Wall Street Journal (WSJ).
While the Natural Resources Defense Council and Environmental Defense claimed victory Monday when Kohlberg Kravis Roberts & Co. and Texas Pacific Group announced plans to take TXU private, other environmental groups are crying foul over the terms of the agreement. Specifically the dissenting groups say that TXU should have been forced to abandon all of its plans to build new coal-fired power plants, not just some. Further, groups have been riled by the news that TXU had already planned to shelve some of the supposedly newly canceled projects. The WSJ article says that the controversy reflects the different approaches of environmental groups in dealing with corporations.
“The infighting shows that tremendous disagreements remain over how tough green activists should be in their dealings with business,” write Rebecca Smith and Jim Carlton, “The TXU deal comes at a time when more businesses are choosing to work with environmentalists to avoid costly and embarrassing public fights on issues ranging from global warming to rampant logging. The Rainforest Action Network, for example, in recent years has forged deals with companies such as Home Depot Inc. to quit using wood products from endangered forests in exchange for public endorsements.”
“But it can be difficult to determine who is empowered to speak for the environmental movement. As is the case with TXU, these dealings often lead to charges from other environmentalists that their peers have been co-opted by big business in exchange for a seat at the table,” the writers continue.
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Environmental concerns plays a key role in overcoming regulatory opposition to the deal. William K. Reilly, an administrator of the Environmental Protection Agency under former Presidents Bush and Clinton, was brought in to help broker the acquisition as a senior advisor to Texas Pacific and liaison to environmental groups.
Nevertheless environmental groups charge TXU with engineering loopholes in the deal which would allow them to continue building new carbon dioxide-intensive coal plants. They say that now that the “well-heeled national environmental groups out of the picture” by agreeing to the deal, TXU will have an easier time minimizing costly environmental constraints.
Citation: “Environmentalist Groups Feud Over Terms of the TXU Buyout”, by REBECCA SMITH and JIM CARLTON. March 3, 2007.