Case illustration: protecting the people – environmental NGOs and TXU Energy

Summary

The coal industry has been under intense regulatory and environmental pressures throughout the 1990s and especially in the early 2000s. During 2006, coal mining was listed as the fifth most dangerous profession in the US due to rising on-the-job fatalities, leading to a federal Miner Act to promote better safety measures. Aside from immediate safety issues, the coal industry is also confronted with increased attention to global warming. Only four years ago, it was expected that shifting prices in natural gas would lead to a greater reliance on coal energy and coal-burning units. However, as global movements, such as the Kyoto Protocol, have gained attention, it is quite possible for worldwide global-warming regulations to gain a foothold. This has deterred companies from burning coal, since it releases such high levels of carbon dioxide that directly contributes to global warming, and had become the point of concern with TXU Corporation.

In response to a predicted coal boom, TXU announced plans to build eleven new coal-burning power plants throughout Texas. Coal was abundant and inexpensive, and TXU saw an opportunity to capitalize on this before the US joined the ranks of other developed countries that have set greenhouse gas emission caps. It had been estimated that coal prices could increase six-fold, subsequently raising coal-powered electricity production by 50 percent. Americans would not be ready for such a substantial increase, which posed a potential decade for TXU to provide inexpensive energy.