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US Banks and Power Companies Announce Carbon Principles

Date: February 6, 2008

Three leading US banks, including ASrIA member Citigroup, as well as JP Morgan and Morgan Stanley have announced the formation of The Carbon Principles which will guide their due diligence process in lending to the US electricity generation sector. The goal of the principles is to ensure that the banks have a robust framework for evaluating policy and operating risks for the largest US power companies, especially those with significant exposure to carbon-intensive fuel and technology assets. The willingness of the parties to come together on this issue confirms that credit risks are rising, both for banks and power companies, as they are forced to make investment and financing decisions in the face of complex policy risks associated with the ill-defined US approach to carbon emissions. Although no Asia country, ex-Japan, is currently an Annex I Kyoto Protocol participant, policy risk is rising for the Asian power sector and their bankers as pressure rises on governments to define emerging climate change policy structures.

http://www.sflnet.com/docs/homepage/CarbonPrinciplesPressRelease_FINAL.pdf