A Free-Market Energy Blog

Paris Agreement: Remember Enron to Rio to Kyoto

By Robert Bradley Jr. -- April 17, 2017

“I am writing to urge you to attend the upcoming United Nations Conference on Environment and Development [‘Earth Summit’] scheduled for early June in Brazil and to support the concept of establishing a reasonable, non-binding, stabilization level of carbon dioxide and other greenhouse gas emissions.”

– Ken Lay [CEO, Enron Corp.] to George H. W. Bush, Letter of April 3, 1992.

“The United States fully intends to be the world’s preeminent leader in protecting the global environment. Environmental protection makes growth sustainable…. [This] recognition … by leaders from around the world is the central accomplishment of this important [United Nations] Rio Conference.”

– George H. W. Bush, “News Conference in Rio de Janeiro, June 13, 1992.

“[Enron was] the company most responsible for sparking off the greenhouse civil war in the hydrocarbon business.”

– Jeremy Leggett, The Carbon War (London: Penguin Books, 1999), p. 204.

As the Trump Administration debates whether or not to have the US stay in the Paris Agreement–a 195-nation accord setting out goals to ration carbon-dioxide (CO2) emissions over the next several decades–it is relevant to trace back the history of the international climate-change movement.

Historians will note it began with the mid-1992 ‘Earth Summit” in Rio de Janeiro, where George H. W. Bush signed the Framework Convention on Climate Change Treaty. The Senate unanimously ratified on the basis that the greenhouse-gas (GHG) reduction goals were voluntary, not mandatory.

The issue was now joined, with tens of thousands of intellectuals, campaigners, and government representatives working on the next steps to override market choices with edicts. With the United Nations leading the way, small beginnings would only grow into one-world government strategies to be mandated.

The Rio convention led to the highly controversial and failed Kyoto Protocol in 1997 and to the Paris Accord, which took effect last year.

Remember Enron

Rio to Kyoto to Paris. That is the official history of what Al Gore called the “central organizing principle for civilization” with government leading mankind to global sustainability, defined in large part by the quixotic notion of ‘climate stabilization’.

But this 25-year chronology should take one more step back. It involves a close friendship that might have tipped the scales to get President Bush to commit the US to the United Nations climate process.

Background: Ken Lay’s Enron set out in 1990 to become the world’s first natural gas major; the most innovative and reliable provider of clean energy worldwide for a better environment. The enemy to natural gas was coal, and Lay worked not only to remove the artificial advantages of coal over natural gas (Fuel Use Act of 1978; incremental pricing rate design, etc.). He worked to reverse the tilt in favor of gas.

Before Lay and Enron were done, seven profit centers were created around the climate change issue, or more specifically, pricing carbon dioxide (CO2). And when the Kyoto Protocol was signed in December 1997, a euphoric Enron lobbyist wrote back home: “This agreement will be good for Enron stock!!).

Little wonder that Enron was identified as “the company most responsible for sparking off the greenhouse civil war in the hydrocarbon business.”

The Lay-to-Bush Letter

In April 1992, a few months ahead of the scheduled Earth Summit in Rio de Janeiro, Enron’s chairman wrote a three-page, carefully orchestrated letter to George H. W. Bush. Here are some key excepts from Lay’s letter (which was cc’d to two pro-Summit Bush advisors Clayton Yeutter and C. Boyden Gray):

Dear Mr. President:

I am writing to urge you to attend the upcoming United Nations Conference on Environment and Development scheduled for early June in Brazil and to support the concept of establishing a reasonable, non-binding, stabilization level of carbon dioxide and other greenhouse gas emissions.

This stabilization level should serve as a useful public policy guide, not a policy mandate. Moreover, I believe a market-based policy approach is the most cost effective and environmentally beneficial method to achieve greenhouse gas stabilization.

The demagoguery on both sides of this issue has been extraordinarily fierce. Frankly, I do not believe the oceans will boil in a few years if we don’t address greenhouse gas emissions, but I also do not believe the U.S. will suffer from economic ruin if prudent steps are taken to reduce CO2 emissions in order to protect the global environment. In fact, if pursued through market-based policies, a reduction in greenhouse gases should result in a cleaner environment, cheaper electricity, and more American jobs.

Among other industries, I am convinced that America’s hard-pressed domestic natural gas industry would benefit substantially from a market-based approach to reducing CO2 emissions. Natural gas is our cleanest fossil fuel and through its increased use in electric power generation could play a major role in reducing CO2 emissions and delivering lower electricity prices to consumers….

In summary, I urge you to provide leadership on this important global environmental issue. Not only will many U.S. industries benefit from measures to reduce greenhouse gas emissions, including the natural gas industry, but with the appropriate market-based policies, the measures will result in a cleaner environment, cheaper electricity, more American jobs, and a reduced trade deficit.

Sincerely,

Ken

Bush went and spoke. Although environmental pressure groups wanted more, the president gave the global-climate negotiations a beachhead. “The United States fully intends to be the world’s preeminent leader in protecting the global environment,” he stated. “Environmental protection makes growth sustainable [as recognized] … by leaders from around the world [at] … this important Rio Conference.”

It all just might have begun with Ken Lay and Enron Corp.

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