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 # 384  

 January 2002

 

Enron and the Environmental Movement:
Global Warming Politics Makes for Strange Bedfellows

by Amy Ridenour


With a payoff worth tens of billions of dollars at stake, Enron Corporation laid out millions in campaign contributions in the 1990s apparently in part to persuade the Clinton Administration and the U.S. Senate to support the Kyoto global warming treaty.

Enron hoped to cash in on the Kyoto treaty by masterminding a worldwide trading network in which major industries could buy and sell credits to emit carbon dioxide - the inert gas that some scientists and most environmentalists believe contributes to global warming.

The Houston firm's lobbying push appeared to be on the verge of success when Vice President Al Gore signed the Kyoto Protocol in November of 1998.

There was a fly in the ointment, however. Ratification of the treaty would have required the U.S. to cut back its CO2 emissions levels by seven percent from 1990 levels, while the treaty allowed major emerging nations such as China, India and Indonesia a free hand in developing industries that spew carbon dioxide into the atmosphere.

The Clinton Administration's interest in obtaining an international agreement to fight global warming meshed with Enron's dream of huge profits from new investments in natural gas utilities and pipelines. Ratification of the Kyoto treaty would have played into Enron's greed by forcing the U.S. to switch from coal-fired power plants to ones fueled by cleaner-burning natural gas. The trading surge in emission credits thus would have funneled an ever-increasing flow of cash into its coffers.

As overseer of a global trading network, Enron almost certainly would have leap-frogged ahead of many older, established companies that actually produce far more energy than Enron, essentially an energy broker.

When the Senate took a hard look at the potential overall economic impact of the Kyoto proposal, it quickly voted 95-0 to urge the White House not to send it any treaty that would have an adverse impact on the nation's economy.

Indeed, the Clinton Administration, although pressured heavily by Enron and such unlikely company allies as the Union of Concerned Scientists and the Natural Resources Defense Council, never sent the treaty to the Senate for ratification.

Two studies by impartial third parties show why: The Energy Information Administration, the official forecasting arm of the Energy Department, found that meeting the Kyoto greenhouse gas limits would increase gasoline prices by 52 percent and electricity prices by 86 percent, and decrease our national gross domestic product (GDP) by 4.2 percent.

A study by Dr. Stephen Brown, Senior Economist of the Federal Reserve Bank of Texas, found that under a best case scenario, reducing CO2 emissions seven percent below 1990 levels - as required under the Kyoto accord - would represent a loss of between three percent to 4.3 percent of U.S. GDP. That comes out to $921 to $1,320 per person and $3,684 to $5,280 for a family of four. Under a worst-case scenario, meeting the Kyoto mandate could cost the average family of four $6,400 a year.

When it became apparent that the Kyoto treaty had little chance of Senate ratification, Enron's well-heeled lobbying corps began seeking ways to implement the treaty provisions most favorable to them through backdoor means.

As part of the strategy, CEO Kenneth Lay signed Enron onto the Business Environmental Leadership Council of the Pew Center for Global Climate Change, a left-leaning think-tank headed by Eileen Claussen, a former Environmental Protection Agency and State Department official in the Clinton Administration.

The Pew Center has waged an expensive propaganda campaign over the past few years aimed at convincing journalists that global warming is a dire threat.

Other companies joining Pew's Business Environmental Leadership Council also stood to gain vast sums if federal regulators imposed strict new limits on carbon dioxide emissions, including such powerhouses as Boeing, British Petroleum, International Paper, Lockheed-Martin, Maytag, 3M, Toyota, Weyerhaeuser and Whirlpool.

Lay, a close personal friend of leading Republicans and Democrats, also joined two far-left environmental groups - the Union of Concerned Scientists and the Natural Resources Defense Council - in calling for new curbs on emitting CO2 into the atmosphere.

Enron might well have been successful in its latest campaign to persuade the Bush Administration to announce far-reaching restrictions on CO2 if the company's apparently devious financial machinations hadn't plunged it into collapse.

Its intricate involvement in, and financing of, a national campaign to ratify the Kyoto global warming treaty and impose carbon caps on much of American industry raises important questions that Congressional hearings likely will explore in the weeks ahead. Among them:

* How much of the campaign was financed by money from Enron's coffers? In spreading it around did the company violate federal election and lobbying laws?

* How duplicitous were the environmental groups that joined Enron in its crusade for Kyoto? Did these organizations financially benefit from their strange bedfellow alliance with giant energy company?

* Did federal and state lawmakers and federal officials in the Bush and Clinton administrations intentionally violate campaign or fraud laws by accepting gifts, gratuities or future high-level positions in return for supporting the company?

Interesting questions all, and the answers likely will determine just how far the unfolding net of the Enron scandal travels and whom it ensnares. The public deserves complete and comprehensive answers to those questions, no matter whose illusions are shattered.

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Amy Ridenour is President of The National Center for Public Policy Research, a Washington, D.C. think tank. Comments may be sent to [email protected].

 





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