Environmental Technology: $48 Billion in Projects
By S.R. Nunnally
In this article
Many folks were up in arms despite the obvious need for power.
Between 2007 and 2010, U.S. coal-fired power plants will spend $48 billion on 584 projects to reduce emissions.
The $48 billion in projects works out to $82 million per project.
Environmental Technology: $48 Billion in Projects
Remember the TXU Corp. (TXU:NYSE) buyout that occurred after the company's proposal to build 11 new coal-fired power plants in Texas? The idea was not received well, and many folks were up in arms despite the obvious need for power.
The $32 billion buyout by an investor group led by private equity firms Kohlberg Kravis Roberts & Co. and TPG, formerly Texas Pacific Group promised to cut electricity rates and decrease the number of new plants built from 11 to 3, while at the same time voluntarily cutting its emissions by 20%.
In response, the surge of clean technologies in the coal industry is garnering a lot of attention.
Between 2007 and 2010, U.S. coal-fired power plants will spend $48 billion on 584 projects to reduce emissions.
IndustrialInfo.com breaks it down like this:
“About half of this spending, $24 billion will be for SO2 reduction projects. Another 26% will be for NOx reduction projects. The remaining 24% of the planned spending, or $11.4 billion will be for other environmental compliance projects such as particulate or mercury reduction.”
SO2 stands for sulfur dioxide, which causes acid rain. NOx stands for nitrogen oxide, which also contributes to acid rain production and ozone.
There are approximately 600 coal-fired power plants in the U.S., and coal accounts for more than half our electricity production. The $48 billion in projects works out to $82 million per project. Of course, it won't be that evenly distributed, but on average, that's less than one-tenth what TXU was willing to pay to build one new coal-fired plant without clean technology.
I won't deny it… these projects will be expensive, but think of it this way… If TXU had put that $11 billion it was going to spend on 11 new plants into upgrading its four existing plants with cutting edge technology, it would be the cleanest coal-burning company in the U.S.
Heck, if they spent that much on only two-thirds of those proposed plants, they would be some of the cleanest-burning coal-fired plants.
This $48 billion-worth of environmental projects speaks volumes at the path TXU was heading down.
And you know, eventually TXU would have had to modify those plants to address any new environmental compliance issues in the future. My guess is that the buyers were thinking the same thing, which is why they chopped the proposed plants from 11 to 3.
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S.R. Nunnally is a commodities expert and technical analyst for Taipan Financial News. She is the editor of Material Profits, a monthly newsletter providing in-depth, cutting-edge research in the commodities sector. She is also the founder of Material Profits Wildcatter, employing an elite group of aggressive investment strategies.
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Related Resources
Industrial Info: U.S. Coal-Fired Power Plants Evaluate $48 Billion in Environmental Compliance Projects
AP: Failure of Legislation Helps TXU Buyers
BusinessWeek: Why the TXU Buyout Faces More Opposition