“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
“If anyone has environmental credit needs, that’s what we do. We want to be to be the clearing house to monetize available credits or to manage risk.”
– Kevin McGowan, director of coal and emissions trading, Enron Corp., (Enron Biz, November 29, 2000, copy in files)
“We are a green company, but the green stands for money.”
– Jeff Skilling, CEO, Enron Corp., quoted in Capitalism at Work, p. 310.
Enron is Exhibit A against Waxman/Markey’s cap-and-trade proposal. Enron was poised to make money coming and going by being the nation’s and the world’s largest market-maker in CO2 permits, and the “smartest guys in the room” were ready to game and game for incremental dollars (remember California?). Enron’s business model, in retrospect, had to do with regulatory complexity, as I note in the introduction to my book Capitalism at Work. Enron gamed the highly prescriptive accounting rules (GAAP), tax system (the corporate tax division was actually a profit center as told in an exposé in the Washington Post.
And so, happy-be-it that, in the words of a Ken Lay (with Roger Sant) editorial, “Controlling Climate Change: It Is Not a Sprint, It Is a Marathon” (Energy Daily: September 1, 1998). Such a “marathon” (and although not mentioned, complexity) is what Enron wanted and needed—to make money month after month, year after year in a political-market setting.
Enron, remember, was a green ( “we want cap-and-trade”) company, but the green stood for money, as Jeff Skilling deadpanned to a perplexed coal executive who encountered a “green” Enron memo on his first day on the job. (Enron quietly got into coal in its last years.)
All this confirms the fears and disdain of uber-vocal NASA scientist James Hansen, who complains in his recent commentary, Worshipping the Temple of Doom:
“Governments are retreating to feckless ‘cap-and-trade’, a minor tweak to business-as-usual….
“Why is this cap-and-trade temple of doom worshipped? The 648-page cap-and-trade monstrosity that is being foisted on the U.S. Congress provides the answer. Not a single Congressperson has read it. They don’t need to – they just need to add more paragraphs to support their own special interests. By the way, the Congress people do not write most of those paragraphs—they are ‘ suggested’ by people in alligator shoes.”
Enron Lives! in Waxman-Markey. The sooner the public, media, and intelligentsia realize this, the faster cap-and-trade can be put in the dustbin of bad ideas.
The current debate has proven one thing very clearly. The U.S. climate debate is not about saving the climate.* It is about regulation for its own sake in the name of “saving the climate.” This fact should give pause to everyone who really cares about human welfare. Cap-and-trade is at odds with the economic wealth needed to adapt to a future that cannot be centrally planned by politicos.
* With Waxman-Markey’s aspirational goal of an 83% reduction of U.S. emissions of greenhouse gas emissions by 2050 reversing out only about 3 percent of the human influence on climate (according to IPCC model projections), equating to about 0.09°F, this is an insurance policy with virtually no redemption value.