Courier Mail
Saturday 3/3/2007 Page: 78
LAST week a group of private equity firms announced the world's largest ever private equity takeover with a value of $56 billion. It is a tale that should ring some very loud alarm bells for Australia's political parties.
However, that alarm has nothing to do with the fact that this is yet another private equity takeover, rather it is all about the target company, one of the world's largest single emitters of greenhouse gases, and the undertaking by the new owners to cancel the construction of a whole slew of planned new coal-burning power stations.
Texas power company TXU Corp has become a cause celebre for its activist pension fund shareholders concerned at the huge potential financial risks associated with its plans to substantially increase its carbon emissions.
Not only have TXU's new owners shelved plans to build eight new coal-burning power stations, but they have also committed to support major new energy efficiency and renewable energy projects and to support mandatory federal climate change regulations. And all of this in the only other developed economy besides Australia to refuse to sign the Kyoto Protocol.
Coal burning is rapidly becoming dirty business in the US and the change is not being led by government but rather by the business world. So where does that leave us? The world is moving on and the rapidly developing landscape in the US means that it is now inevitable that the US will join the post-Kyoto world following its 2008 presidential election.
Despite this, at federal level both of our major political parties continue to look at things in a piecemeal fashion seeking single solutions to a problem that will require a whole spectrum of co-ordinated policies. Even worse, both appear intent on closing off options.
Labor point blank refuses to consider the nuclear option, but is happy to sell uranium to others to do exactly what it refuses to do. It has to be one of the most illogical policy stances ever seen in Australian politics. As for the Government, it refuses to treat wind and solar with anything like the seriousness they deserve, while its support for nuclear is more to drive a wedge into Labor than reflecting any real interest in the option.
The TXU takeover suggests that time is running out for us to get our greenhouse agenda together or risk being ostracised by an increasingly anxious world.
Tim Hughes is a director of Value Capital Management.
timvcm@bigpond.net.au
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