Robin Bravender, E&E - 7/15/2009

A coalition of environmental groups launched a campaign today aimed at persuading investors in new coal-fired power plants to invest in renewable energy instead of coal.

Ten environmental groups are hoping to convince the investment company Blackstone Group LP and its subsidiary Sithe Global to drop plans for three new coal-fired power plants, citing concerns about emissions of carbon dioxide and other pollutants, as well as other environmental and economic concerns.

The advocacy groups are targeting three large power plants planned by Sithe: the 1,500-megawatt Desert Rock plant on Navajo Nation land in New Mexico; the 750-megawatt Toquop plant near Mesquite, Nev.; and the 300-megawatt River Hill waste-coal plant in Clearfield County, Pa. The Desert Rock and Toquop plants are still in the development stages, and preliminary construction on the River Hill plant began in January 2007.

The coalition includes Western Resource Advocates, the Natural Resources Defense Council, the Sierra Club, Defend Our Desert, the Nevada Conservation League, the Southwest Energy Efficiency Project, the Progressive Leadership Alliance of Nevada, the San Juan Citizens Alliance, Diné Care and Citizens for Dixie's Future.

When the plants were first conceived, they probably seemed like good investments because natural gas prices were high and electricity demand was growing, said Mark Brownstein, a financial analyst with the Environmental Defense Fund. Since then, he added, "much has changed."

Brownstein said the landscape for coal-fired power has changed dramatically due to falling natural gas prices, a drop in demand due to the economic downturn and the possibility of congressional action to regulate carbon dioxide emissions. And while it is a mistake to assume that recessionary economics will continue, much of the projected energy demand had been predicated on housing growth, where dynamics have changed drastically, he said.

"Blackstone insists on keeping Sithe's reckless financial plan alive, ignoring the fact that these plants will emit millions of tons of dangerous and expensive CO2 pollution," said Tim Hay, a former Nevada public utility commissioner and Nevada consumer advocate. "There is a growing consensus in both the regulatory and financial communities that these plants represent a great risk to both investors and ratepayers."

Frank Maisano, a principal at Bracewell & Giuliani, a Washington, D.C., law firm that represents Sithe Global, rejected the idea that energy demand would remain low. "It's irresponsible to assume that we're going to be in a recession for the rest of our lives," he said. Developing renewable resources is also important, he said, but both forms of energy will be needed to meet future needs.

Blackstone spokesman Peter Rose said the company is "very much committed to environmental responsibility."

The investment group is raising a $500 million fund to make investments in "clean" technology and is in the process of reviewing its portfolio companies to ensure that they meet the highest environmental standards, Rose said.

"Sithe itself develops all varieties of energy, including sustainable and alternative energy," Rose said, noting that the company is one of the funders of Africa's largest hydroelectric power project and is planning a wind project off Germany's coast.

The three coal plants in question will "either meet or exceed all emission standards," Rose said, and the new capacity will compete against existing capacity at older, dirtier plants, thereby reducing emissions.