NEW YORK (
) -- A two-decade battle to force strict pollution controls on the coal-fired power industry finally ended in victory for the environmental movement this week, but a war against
and the coal empire within Buffett's
is just getting started.
"Buffett has skirted our attention for many years and he will be in our crosshairs. He has made a bet on coal being around for longer than we anticipate, and we are going to make sure he never sees that dream," said Bruce Nilles, director of Sierra Club's Beyond Coal campaign.
Warren Buffett has a target on his back headed into 2012, courtesy of the environmental lobby.
On Wednesday, the Environmental Protection Agency issued its Utility Air Toxics Rule, the most forceful air pollution rule in decades, and a rule which is expected to result in significant coal plant retirements.
Sierra Club's Nilles described the battle against coal power plants and the long road to victory this way: "The industry was successful in delaying the rule for 22 years." The long road to victory also means that the environmental movement is finally free after a two-decade war to fight other battles, including taking on Buffett directly.
"It's a whole new front with these rules final now," Nilles said. A check written by Mayor Michael Bloomberg of New York in June for $50 million to help the Sierra Club's Beyond Coal campaign will also allow the anti-coal lobby to expand its war.
The battle that is brewing between the environmental lobby and Buffett is one more sign of the contradictions inherent in the carefully cultivated public image of Buffett and the actual workings of a capitalist machine as diverse, and at the same time integrated, as Berkshire Hathaway.
-- in which its utility businesses are organized -- has been a primary driver of wind energy generation in the U.S. Iowa has reached 25% of its energy generation from wind, leading the U.S., in part because of the role played by MidAmerican Energy. This month, MidAmerican announced its
first two investments in the solar energy industry.
Yet for all of the renewable energy projects under MidAmerican's wing, Buffett's Berkshire Hathaway is a vertically integrated coal profit machine. The Sierra Club is saying it's time to bring that fact to the forefront of the public debate, while giving Buffett credit for the strides made by MidAmerican Energy in renewable generation. The battle will center on a Western region utility within MidAmerican,
"MidAmerican seems to be doing some good stuff, but PacifiCorp is stuck in the 19th century, maybe even the dark ages," Sierra Club's Nilles said. He described it as the iconic power company for all the wrong reasons.
MidAmerican Energy did not respond to a request for comment. At the 2011 annual meeting for Berkshire Hathaway shareholders, requiring a carbon footprint disclosure of the company was proposed by certain shareholders. After a half-hour of debate on the climate change disclosure proposal, Buffett spoke out against it, arguing that the state laws governing such matters are complex and could pose problems for Berkshire.
To some degree, the environmental lobby has already been fighting Buffett, albeit indirectly, over the coal issue in the past six months, and as a result of Buffett's 2010 acquisition of
railroad. As coal analysts, not rail analysts, noted after Buffett's big bet on the railroads, it was also a big bet on the business of exporting coal to Asia to meet its rapacious energy appetite.
The environmental lobby has been fighting plans by Burlington Northern to establish coal export terminals on the West Coast. After all, global warming knows no geographic boundaries: Just because less coal will be emitted from U.S.-based stacks as a result of the new rules won't slow the emitting of coal globally into the atmosphere. The public health victory for the U.S. with cleaner air is distinct from the global warming issue (the flexibility to update coal plants in the new rule, as opposed to retire them, makes the global warming issue more prominent, too).
"Given how hard Burlington Northern has been pushing for that export piece, the decision must be coming from the top," Nilles said, in a reference to placing Buffett front-and-center in the coming war.
The war on Buffett's coal empire will also target PacifiCorp's plans to upgrade existing coal plants, rate payer electricity rate hikes across the PacifiCorp coal plant fleet region, and what the Sierra Club views as Buffett's general intransigence in updating the PacifiCorp power plant fleet. "Buffett is soaking rate payers across the region of his coal fleet," Nilles said. Local citizens' utility boards have already been engaged in multiple wars with PacifiCorp over plans to raise rates.
In one example, PacifiCorp has plans to upgrade its existing Naughton coal plant in Wyoming with the help of state money. "You've got one of the best wind resources in the country so why are you putting pollution controls on a coal boiler," Nilles asked. The Sierra Club is targeting relationships between Buffett's PacifiCorp and the governments of Wyoming and Utah, where significant financial support that averts a permanent move away from coal is being offered.
The Naughton plant is not an isolated case, either: "When you go out west you run into a large wall of towering coal stacks with Warren Buffett's name on them," Nilles said. "We can't make the transition away from coal without getting Buffett to do his fair share. The MidAmerican machine can continue to make reasonable profits, but not on the backs of accelerating global warming," the environmental lawyer said.
The environmental lobby isn't picking a fight with Buffett because of his public profile, necessarily, but because on a relative basis PacifiCorp has been more stubborn that most utilities when it comes to the coal issue, with the exception of
American Electric Power
, which fought the new EPA rule to the bitter end. In the west specifically,
has recently acquiesced to changing Colorado-based coal power plants, an example that the Sierra Club says again shows Buffett's stubborn nature on the coal issue relative to utility peers.
While the campaign against Burlington Northern and the coal export terminals has been "a standoff thus far" according to the Sierra Club Beyond Coal director, he's betting that a more concerted effort directed against Buffett will get the attention required to bring the parties to the table.
"It's usually a standoff until they realize we are serious and then we have a discussion. This is just beginning. MidAmerican is doing some things with wind and solar and we are interested in having a dialogue and candid discussion about the biggest war on our system," Nilles said.
It may be the conservative Koch brothers of
who normally attract the vitriol of the environmental lobby due to their campaign to debunk global warming, rather than a man like Buffett with interests in wind and solar, and a direct line to President Obama's White House. However, Sierra Club's Nilles -- no friend of the Koch Brothers -- said a fight against Buffett may find some unlikely allies: "Every billionaire in the country hates him."
This year, Buffett came out as President Obama's unofficial spokesman among the elite in the "class war" and the call for higher taxes on the rich.
Buffett commented this year that he has his elephant gun loaded, in a reference to acquisition hunting. It turns out, though, that headed into 2012 there's a gun aimed at him. Instead of being known as the markets sage, the Oracle of Omaha, the Sierra Club plans to rebrand Buffett as Old King Coal for a change.
-- Written by Eric Rosenbaum from New York.
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