Increasingly businesses are making what may be viewed as environmentally friendly decisions because they help their bottom lines. Wal-Mart, for example, has committed to cut its greenhouse gas emissions by 20 percent by 2012 and to make its truck fleet 30 percent more energy efficient. This week, the proposed buyers of the largest energy provider in Texas said they would cancel most of the company’s proposed new coal-fired power plants to avoid costly regulatory hurdles and expected lawsuits. While these developments are good news, they are not a substitute for government action, which would be more consistent and industrywide.
TXU, the largest utility in Texas, has agreed to a $45 billion buyout by two private equity companies with the unusual conditions that the company cancel plans to build eight of 11 new coal-fired power plants and that it back federal legislation calling for a cap-and-trade system to reduce emissions of carbon dioxide and other greenhouse gases linked to climate change. The company would also double its spending on energy efficiency to $80 million a year and cut its greenhouse gas emissions to 1990 levels by 2020. Shareholders must still approve the deal, under which Environmental Defense will drop its objections to the three remaining new coal-fired plants.
The deal signals a growing concern among energy generators about future regulation of the industry. Some believe companies such as TXU were rushing to build new plants before Congress enacts limits on greenhouse gas emissions in hopes that existing plants would be grandfathered. Others see an industry trying to cut emissions — and costs — before being forced to.
Also this week, the governors of Washington, Oregon, California, Arizona and New Mexico agreed to work together on a regional carbon trading program, like the one adopted by nine Eastern states, including Maine.
One of the reasons the corporations say they are urging Congress to act on climate change is that they fear states devising their own standards, creating dozens of different sets of rules with dozens of advocacy groups pushing for even tougher standards to make their lives miserable and perhaps unprofitable.
Another reason is that changes that reduce emissions and other environmental impacts usually also cut costs. Wal-Mart has pledged $500 million a year to reduce its emissions, make its stores 30 percent more energy efficient, and cut its solid waste by a quarter in three years. It is encouraging its suppliers to do the same to cut costs by $3.4 billion.
If the threat of federal regulations is having positive effects, imagine what actual regulations could achieve.