Study: Carbon legislation makes coal a foolish investment

By Dan Haugen
Wednesday, March 26, 2008 at 6:30 am

A financial research firm that was ahead of the curve on red-flagging Bear Stearns Companies’ bad investments is now warning a Kansas utility that expanding a coal-burning power plant would also fall under the financially dubious column. Innovest’s report, “Sunflower Electric Power: Carbon Risks Outweigh Benefits of Holcomb Expansion” (pdf), says looming federal carbon legislation will mean decades of rising prices for coal-generated electricity.

Continued: Click “Read more”The study only specifically looks at risks associated with the Kansas project, but the Solve Climate blog says the groundbreaking report makes a strong argument against coal there or anywhere else. In Minnesota, opponents of the proposed Big Stone II coal-burner on the South Dakota border have made similar arguments against that project, and I’m sure they’re reading this report with interest.

All three major presidential candidates support legislation to cap and penalize carbon emissions. One of the proposals considered in the Innovest report was coauthored by John McCain. It’s expected Barrack Obama or Hillary Clinton would support more aggressive penalties for carbon emissions.

“The fundamental question regarding the regulatory scenario on climate change in the US is not whether legislation will be enacted, but when,” the Innovest report says. Sunflower Electric Power Corporation, in its attempts to expand capacity at its Holcomb Station power plant, “has not adequately addressed the financial risks associated with the CO2 output” and as a result it “is putting its ratepayers and owners at significant risk.”