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WSJ’s “Heard on the Street”: Political Energy Down, Market Energy Up Post-Copenhagen (Remembering the risks of Enron’s political capitalism model)

By Robert Bradley Jr. -- December 26, 2009

Matthew Curtin’s Heard on the Street in the December 22nd Wall Street Journal, Green Investments Are Being Clouded by Copenhagen, caught my eye. Copenhagen not so much failed as energy reality won. The 19th century British economist W. S. Jevons would have smiled as neo-Malthusian politics fell victim to old fashioned consumerism, economic growth, free trade, and energy economics 101.

Copenhagen also brings into review the risky political capitalism model where profit-making is tied to special political favor rather than underlying consumer demand. Enron’s core business model was tied to rent-seeking, part of the problems that brought down the company in spectacular fashion.

Here is what Mr. Curtin wrote:

The Copenhagen climate summit will do little to spur further investment in environmental technologies.

That is hardly surprising given the fundamental flaw at the heart of the process: Negotiations to reduce global carbon dioxide emissions were premised on how much of the gas nations produce, rather than what they consume.