Our friends at the Natural Resources Defense Council had a banner weekend raising public awareness about global warming and transforming that concern into action to cut CO2 emissions. Most of the popular attention focused on the Academy Awards ceremony in Hollywood, where Al Gore’s Inconvenient Truth garnered two Oscars--and where NRDC helped to make a "green" Oscar ceremony. The big news on Wall Street, however, was that the NRDC and Environmental Defense helped to set the terms for a private buyout of a Texas power company that includes scrapping plans to build eight new coal-powered plants. At $45 billion, the buyout would be the largest private equity deal in history.
Since global warming is a problem largely created by the rich countries that will hurt poor people in developing countries first and worst, Hollywood's attention to gloal warming and fresh evidence that public opinion is already changing corporate policies towards climate change are both welcome news for the developing world.
In Hollywood, Al Gore and Leonardo DiCaprio, an NRDC trustee and nominee for Best Actor, announced that NRDC had partnered with the producers of the 79th Annual Academy Awards to significantly reduce the impact the telecast and related events had on the environment. The effort included an energy audit to identify ways to cut energy consumption in the Kodak Theatre venue and buying renewable energy credits to offset emissions.
“For the first time in the history of the Oscars, environmentally intelligent practices have been thoughtfully integrated into the planning of tonight's event to make our world healthier and help combat the threat of global warming," DiCaprio said.
It’s customary in Washington policy circles to be skeptical about Hollywood causes. After all, it wasn’t so long ago that Hollywood was all about concern for HIV/AIDS. Last night there was little mention of the disease beyond the The Blood of Yingzhou District, the story of a Chinese AIDS orphan that won Best Short Documentary. Yet who’s to say that Hollywood’s attention to HIV/AIDS isn't a big part of the reason that billions of dollars in public money are now being spent annually to respond to the disease?
The power of mobilized public opinion to change behavior related to climate change was clearly evident in the news from Wall Street and Texas, first reported in the New York Times on Sunday. According to the NYT and subsequent news reports, two private equity firms, Kohlberg Kravis Roberts & Company and the Texas Pacific Group, were preparing a leveraged buyout of TXU Corporation, a Texas utility that has long been the bane of environmental groups, and had asked NRDC and Environmental Defense what it would take to win their support for the deal. Answer: start by scrapping plans for eight new coal-fired plants.
The Washington Post reported on Monday that changes in TXU policies would include support for climate-change legislation:
If shareholders approve the acquisition, TXU would back federal legislation that would require reductions in carbon dioxide emissions through a cap-and-trade system. It would shelve plans for eight of 11 coal-fired plants that current TXU executives had proposed for Texas and would drop plans to build new coal plants in Pennsylvania and Virginia. The company would also double its spending to promote energy efficiency, to $80 million a year, for five years.
"We think this is really a big deal, a watershed moment in America's fight against global warming," said Jim Marston, regional director of Environmental Defense in Austin, who helped forge the environmental accord in a 17-hour negotiating session with the buyout firms on Wednesday. He said it would reshape the electricity sector in Texas and alter the attitudes of Texas congressmen toward climate-change legislation.
The buyout firms also promised to cut TXU's emissions of carbon dioxide, the most prevalent of greenhouse gases scientists blame for global warming, to 1990 levels by 2020. This matches the targets contained in legislation passed last year in California but exceeds anything TXU is obligated to achieve.
The idea that public pressure can cause companies to be cleaner than is required by law--and that this in turn can help to shape legislation and regulations--is at the core of well-established approach to pollution reduction known as public information disclosure. Before coming to CGD, senior fellow David Wheeler led a World Bank team that helped first Indonesia, then the Philippines, China and Vietnam to rate firms according to their environmental performance and use color-coded ratings to create incentives for reduced pollution. In all four cases, the performance rating programs achieved big reductions in polluting emissions. He is now exploring the potential for applying the same approach to CO2 emitters in the U.S., as part of a new CGD initiative.
From Hollywood to Wall Street and Texas, the weekend's news offered further welcome evidence of the potential power of such an approach.