Three Banks Aim to Expand Carbon Principles to Public Utilities

Three Banks Aim to Expand Carbon Principles to Public Utilities

The three worldwide banks that developed The Carbon Principles to guide financing of investor-owned utilities hopes to apply those same principles to public utilities.

Citi, JPMorgan Chase and Morgan Stanley have been in talks with municipal utilities about developing investing guidelines that take greenhouse gas emissions into account when deciding what energy to support, the Wall Street Journal reported.

The Carbon Principles were set up so the banking industry could assess the regulatory and financial risks associated with greenhouse gas-emitting projects like coal-fire power plants. They also encourage energy efficiency, cost-effective renewable energy and carbon capture and storage. Last year, investor-owned utilities canceled plans to build 16,577 megawatts of power plants, 84 percent of which was coal-fired plants, according to utility trade group Edison Electric Institute.

The banks pushed for the Carbon Principles to be applied to investor-owned utilities first because they produce more electricity than public utilities and are less numerous, the Journal reported. Part of the concern behind the Carbon Principles is the fear that shareholders or bondholders could be tapped, if utilities' costs rise too high, in order to keep rates lower for customers.

All together, the power industry produces 40 percent of the United States' carbon dioxide emission and borrowed $427 billion in capital last year.