Rent Seeking with Global Warming: From Enron to California AB 32
Jon Coupal, president of the Howard Jarvis Taxpayers Association, is a co-chair of the committee supporting the California citizens’ ballot initiative, Proposition to suspend California’s Global Warming Solutions Act (AB32).
The mainstream media has perpetuated a misperception that the Proposition 23 to suspend AB 32 is the work of, and funded by, sinsiter out-of-stater parties. That’s neither a real issue (what happens in California affects everybody) nor factually correct.
I can attest to the homegrown nature, having been involved for over four years—essentially since AB32 was first passed in 2006, as have others. The funding for opposition to the initiative has gotten very little attention by MSM, a phenomenon Mr. Coupal begins to correct in his featured column, reproduced below with permission, on the popular website FlashReport.
His editorial links Enron to regulating carbon dioxide (CO2). In fact, Enron had seven profit centers tied to pricing CO2 via cap-and-trade. Enron, as the following quotations attest, was vitally interested in what became AB 32. Here is some history of Enron, climate alarmism, and CO2 regulation (prominently including cap-and-trade):
“Since 1976, Enron [and predecessor company] employees have been at the forefront of developing air credit trading policies for governments and businesses…. Enron today is the largest and most sophisticated air emissions credit and allowance trading organization in the United States. Since 1990, Enron has participated in over 80 SOx allowance transactions and has also been active in establishing policies for trading NOx in the United States and carbon [dioxide] world-wide.”
- “Enron Corp.’s Participation in Air Trading,” Enron Capital & Trade Resources, November 4, 1996 (copy in files).
“If implemented, [the Kyoto Protocol] will do more to promote Enron’s business than will almost any other regulatory initiative…. The endorsement of [CO2] emissions trading was another victory for us…. This agreement will be good for Enron stock!”
- John Palmisano (December 12, 1997) from Kyoto, Japan. Quoted in Bradley, Capitalism at Work, p. 307.
“We are a green company, but the green stands for money.”
- Jeff Skilling, CEO, Enron Corp., quoted in Capitalism at Work, p. 310.
Jon Coupal is quite Californian and quiet critical of AB32. His article is thus reprinted in full.
Ken Lay, the former CEO of Enron, loved the idea of a cap-and-trade program for carbon dioxide. Ken Lay, a Greenie? Of course. He was chasing green his whole life. Cap-and-trade, according to the felonious Mr. Lay, would “do more to promote Enron’s business than almost any other regulatory initiative.”
Enron brass may have been criminals, but they were smart. Enron made their money trading stuff, and the mother-of-all markets is for carbon dioxide. Yup, the very stuff that we all exhale with every breath and that is generated by cars, air conditioners, stoves, washing machines, livestock . . . just about every human endeavor that involves energy.
But there is a big problem trying to trade in a commodity for which there is no natural market. You see, the law now is that Americans do not need a permit to breath. But if crafty market manipulators were somehow able to get government to create such a market, and if those same crafty capitalists could control that market, they would become very, very wealthy.
One of the ways the California Air Resources Board (CARB) proposes to reduce carbon dioxide emissions is through the very kind of cap-and-trade system envisioned by Enron as its next big profit-center. But since Enron is no longer, its philosophically simpatico progeny are planning to use California’s global warming law, AB 32, as their very own treasure chest.
But one thing stands in the way of those who stand to profit handsomely from California’s one-of-a-kind global warming law: Proposition 23. A broad coalition of taxpayer groups, large and small businesses and labor organizations have qualified this measure which would temporarily suspend AB 32 until California regained its economic footing by improving its employment situation.
Those who thought that AB 32 was about saving the planet need a reality check. Even the California Air Resources Board concedes that California’s global warming law, by itself, will do nothing to solve global warming. The opposition to Prop 23 is all about the money.
So who exactly is bankrolling the opposition campaign? It certainly isn’t the earnest environmentalists in their Birkenstocks. The big bucks are coming in from hedge fund managers, Wall Street traders and venture capitalists. In fact, a hedge-fund manager formerly of Wall Street’s Goldman Sachs is the major contributor to the No on Proposition 23 campaign.
These moneyed interests want to use AB 32 to take money out of the pockets from the rest of us in the form of higher energy costs and put it in their pockets in the form of AB 32 credits and subsidies. Proposition 23 would put a stop to that Wall Street game-playing.
Let’s be clear. Most of us backing Prop 23 are big proponents of capitalism. What we object to, however, are the corporate rent seekers who pursue market manipulation and heavy government subsidies at the expense of everyone else.
Opponents of Prop 23 will tell voters that we need AB 32 for “Green Jobs.” Baloney. There is a market for green jobs right now and we don’t have to trash the California economy in order to attract them. In fact, California would have a lot more green jobs now if it were not for our hostile tax and regulatory environment. Ironically, many of these “green jobs” have already moved out of state because California ranks dead last in multiple surveys on business climate.
Opponents will say we need the absurd and byzantine regulations flowing from AB 32 to foster “Green Tech.” Again, this is merely an admission that their business models won’t be profitable without government intervention. “Green Tech” may just as well be called “Greenbacks Tech.”
China, India, France, Australia, all other western states and now the U.S. Senate have recognized the high costs of cap-and-trade and have abandoned such programs until the economy recovers. Even Spain, the champion of green jobs, found that for every green job they created with taxpayer money, it destroyed two jobs in the larger economy.
Opponents of Prop 23 have been very vocal about who is funding our campaign. It is absolutely true that the petroleum industry has a lot a stake in this fight because, left unabated, AB 32 will cause dramatic increases in the cost of fuel and energy. But here in California, these companies employ tens of thousands of workers and pay millions to the state and local governments in tax revenues. Plus, they produce products that we actually use.
So when the Spawn of Enron executives, hedge-fund and venture capital managers and Wall Street traders complain about “out-of-state oil companies,” remind them that those who live in glass houses shouldn’t throw stones.
Enron was the company at the center of California’s electricity crisis a decade ago. The Houston-based company was the corporation that Californians loved to hate. The legacy of Enron might just be a factor in the passage of Prop. 23 suspending AB 32, a fitting tribute indeed!