Feb 27 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Randy Lee Loftis and Elizabeth Souder The Dallas Morning News

The buyout of TXU by two private equity firms that have agreed to kill eight of the company's 11 proposed coal-burning power plants cools off the biggest environmental battle in Texas and could reposition the state in the national debate over how to curb global warming.

But it doesn't resolve the fundamental environmental problems that made the huge fleet of proposed coal plants so controversial across the state and the nation. Solving those would require a longer effort to make basic changes in how Texas deals with energy and the environment.

Even if TXU's new owners keep their pledge to embrace caps on carbon dioxide emissions and to join a nationwide group of companies advocating action to protect the climate, Texas will remain the nation's biggest and the world's seventh-biggest emitter of greenhouse gases.

Texas does not control or even monitor greenhouse gases and has taken no step toward doing so, saying those are strictly federal jobs. By embracing coal, Gov. Rick Perry and other supporters of the new coal plants had advocated the most carbon-intensive of all electricity fuels.

Other states, notably California, have taken action themselves, in part to pressure Congress and the Bush administration to act. The Senate is considering bills that would regulate carbon dioxide, and the TXU announcement seemed likely to boost their prospects.

Despite Texas' inaction on global warming, environmentalists said the TXU agreement sends a strong signal to other power companies still contemplating more than 100 coal plants nationwide. With public and political opinion turning, they said, shareholders might now see old-style coal plants as an unacceptable risk, they said.

"It's not safe to assume any more that you can just rush new plants forward" without taking steps to limit greenhouse gas emissions, said Peter Altman, coal campaign director at the National Environmental Trust.

David Hawkins, director of the climate center at the Natural Resource Defense Council, called the TXU deal "an earthquake that happened in Texas but will be felt nationwide and on Wall Street." His organization, with Environmental Defense, negotiated the environmental agreement with TXU's buyers.

TXU's turn toward energy efficiency and climate protection adds weight to the search for an alternative to a massive coal expansion, Mr. Hawkins said. "That's good news, and it's the reason that we support the buyout," he said.

System questioned

Meanwhile, complaints remain about flaws that the proposed plants exposed in Texas' environmental rules. The state's permitting system for new power plants ignores cumulative effects of multiple plants, doesn't require studies to protect public health in areas such as Dallas-Fort Worth, and is out of sync with urban air-quality planning.

The coal boom has stirred efforts in the Legislature to close those loopholes. Environmentalists noted Monday that the remaining plants on TXU's wish list would still be big polluters.

Advocates will ask the Legislature to impose a two-year moratorium on new coal plants to allow time for the rules to catch up with clean-air concerns, said Tom "Smitty" Smith, head of the Texas office of Public Citizen, a watchdog group. "What this allows the state to do is take a deep breath and develop a plan," he said.

Local battles over the three remaining new TXU coal plants and five others that other companies still could build in Texas will continue as well. In particular, TXU's proposed two-unit Oak Grove facility in Robertson County is the subject of a permit fight before the Texas Commission on Environmental Quality.

Oak Grove's two units and a new unit at TXU's Sandow plant in Milam County are the only ones the company proposed that would burn Texas lignite, the most-polluting form of coal. The others would have burned cleaner Wyoming coal.

Opponents said they would continue to fight the Oak Grove permit. But Dallas Mayor Laura Miller, who is leading a coalition of cities against the new TXU plants, said the TXU deal could make it harder to defeat that plant.

Second look

State administrative hearing judges recommended denial of the Oak Grove permit, citing what they said were pollution-control problems. With most of TXU's other new coal plants off the table, however, state environmental commissioners might be more inclined to approve Oak Grove.

"With Environmental Defense's blessing, I would think that the TCEQ would be very comfortable overturning the recommendation for denial, which would be very unfortunate," Ms. Miller said.

The commission won't vote on the Oak Grove plant until the Senate confirms a third commissioner. Mr. Perry has nominated former aide Buddy Garcia.

Other opponents of TXU's coal expansion also had mixed reactions, including Dallas businessman David Litman, a founder of Texas Business for Clean Air and Hotels.com.

"It still remains there are three coal plants being built, and those are the lignite plants, so we have to gauge their emissions and what their emissions will be," he said.

Garrett Boone, also a Texas Business for Clean Air founder and chairman of The Container Store, was upbeat.

"The first thing is to celebrate," Mr. Boone said. "This is so important for the whole country. The question was: How easy would it be to just build a ton of coal plants? At least the message is: It's just going to be dad-gummed hard."

Mr. Litman chimed in. "If it's hard in Texas," he said, "it's going to be hard everywhere."