Banks Set Guidelines on Financing 'Dirty' Plants

RENEE MONTAGNE, Host:

Financing coal-fired power plants could become a bit trickier. Coal provides about half the nation's electricity, but it's one of the dirtiest sources of power. The government's talking about imposing caps on greenhouse gas emissions, and that could make financing coal plants a riskier investment. Now three of the country's biggest banks have announced they're rolling out new environmental standards for funding new coal plants. NPR's Christopher Joyce has more.

CHRISTOPHER JOYCE: The banks are Citigroup, JP Morgan Chase, and Morgan Stanley. They have come up with something they call carbon principles. Eric Fornell, vice chairman of JP Morgan Chase, says his bank needs to educate utilities about the special risks of coal before they lend them money.

MONTAGNE: Well, we want to be assured that they have considered, instead of building a power plant, to consider using renewables or conservation as a way of reducing the need for a power plant. And then if they are going to build a power plant, they have considered the risks around greenhouse gases and the possibility that the government may raise the costs for people who build power plants that generate CO2.

JOYCE: Congress is considering several bills that would put a cap on the amount of carbon dioxide created by industry and penalize companies that emit too much of it. The banks have been talking about this for a year with utility companies and environmental groups. Matt Arnold with an environmental consulting group called Sustainable Finance helped broker the agreement on principles. He and Fornell say the writing on the wall increasingly reads carbon will cost you.

MONTAGNE: Coal projects at the local level for various reasons have been rejected. Banks have been asked to be more careful or to stop financing coal-fired power. And so it's sort of a political mess, and there's no federal guidance. So there are no rules.

JOYCE: Christopher Joyce, NPR News. Transcript provided by NPR, Copyright NPR.