The recent $45 billion leveraged buyout of TXU Energy initiated by Kohlberg, Kravis, Roberts & Co., and the Texas Pacific Group represents a significant step forward in how the financial community in the US, and private equity firms in particular, approach the opportunities and risks of climate change. A cornerstone of the agreement by Texas Energy Future Holdings Limited (the private equity entity) is an announcement to scale-back TXU’s massive investments in coal-fired power from eleven proposed new plants to three, thus significantly reducing anticipated greenhouse gas emissions. TXU also committed to revising corporate policy in favor of federal legislation to regulate greenhouse gas emissions. However, transparency, stakeholder engagement, and accountability will be essential to manage the many challenges of implementation, and ensure that this deal delivers on its promise. Regardless of who owns TXU, a key issue going forward is how the energy company it will be held accountable to its commitments and the ongoing concerns of citizens of Texas. Stakeholders – both locally, and those investing in the new ownership group – will need to monitor these commitments. We will undoubtedly see new and innovative ways to hold these largely unregulated actors accountable.
For more information see” Following Through on Climate Promises” by Jon Sohn and Smita Nakhooda in the April 2007 issue of Environmental Finance
www.environmental-finance.com/2007/0704apr/features.htm#nf2
