We all know that the
financial stakes are enormous in the global warming debate — many oil,
coal and power companies are at risk should carbon dioxide and other
greenhouse gases get regulated in a manner that harms their bottom
line. The potential losses of an Exxon or a Shell are chump change,
however, compared to the fortunes to be made from those very same
regulations.
The climate-change industry — the scientists, lawyers, consultants,
lobbyists and, most importantly, the multinationals that work behind
the scenes to cash in on the riches at stake — has emerged as the
world’s largest industry. Virtually every resident in the developed
world feels the bite of this industry, often unknowingly, through the
hidden surcharges on their food bills, their gas and electricity rates,
their gasoline purchases, their automobiles, their garbage collection,
their insurance, their computers purchases, their hotels, their
purchases of just about every good and service, in fact, and finally,
their taxes to governments at all levels.
These extractions do not happen by accident. Every penny that leaves
the hands of consumers does so by design, the final step in elaborate
and often brilliant orchestrations of public policy, all the more
brilliant because the public, for the most part, does not know who is
profiteering on climate change, or who is aiding and abetting the
profiteers.
Some of the climate-change profiteers are relatively unknown
corporations; others are household names with only their
behind-the-scenes role in the climate-change industry unknown. Over the
next few weeks, in an extended newspaper series, you will become
familiar with some of the profiteers, and with their machinations. This
series begins with Enron, a pioneer in the climate-change industry.
Almost two decades before President Barack Obama made “cap-and-trade”
for carbon dioxide emissions a household term, an obscure company
called Enron — a natural-gas pipeline company that had become a
big-time trader in energy commodities — had figured out how to make
millions in a cap-and-trade program for sulphur dioxide emissions,
thanks to changes in the U.S. government’s Clean Air Act. To the
delight of shareholders, Enron’s stock price rose rapidly as it became
the major trader in the U.S. government’s $20-billion a year emissions
commodity market.
Enron Chairman Kenneth Lay, keen to engineer an encore, saw his
opportunity when Bill Clinton and Al Gore were inaugurated as president
and vice-president in 1993. To capitalize on Al Gore’s interest in
global warming, Enron immediately embarked on a massive lobbying effort
to develop a trading system for carbon dioxide, working both the
Clinton administration and Congress. Political contributions and
Enron-funded analyses flowed freely, all geared to demonstrating a
looming global catastrophe if carbon dioxide emissions weren’t curbed.
An Enron-funded study that dismissed the notion that calamity could
come of global warming, meanwhile, was quietly buried.
To magnify the leverage of their political lobbying, Enron also worked
the environmental groups. Between 1994 and 1996, the Enron Foundation
donated $1-million to the Nature Conservancy and its Climate Change
Project, a leading force for global warming reform, while Lay and other
individuals associated with Enron donated $1.5-million to environmental
groups seeking international controls on carbon dioxide.
The intense lobbying paid off. Lay became a member of president
Clinton’s Council on Sustainable Development, as well as his friend and
advisor. In the summer of 1997, prior to global warming meetings in
Kyoto, Japan, Clinton sought Lay’s advice in White House discussions.
The fruits of Enron’s efforts came soon after, with the signing of the
Kyoto Protocol.
An internal Enron memo, sent from Kyoto by John Palmisano, a former
Environmental Protection Agency regulator who had become Enron’s lead
lobbyist as senior director for Environmental Policy and Compliance,
describes the historic corporate achievement that was Kyoto.
“If implemented this agreement will do more to promote Enron’s business
than will almost any other regulatory initiative outside of
restructuring of the energy and natural-gas industries in Europe and
the United States,” Palmisano began. “The potential to add incremental
gas sales, and additional demand for renewable technology is enormous.”
The memo, entitled “Implications of the Climate Change Agreement in
Kyoto & What Transpired,” summarized the achievements that
Enron had accomplished. “I do not think it is possible to overestimate
the importance of this year in shaping every aspect of this agreement,”
he wrote, citing three issues of specific importance to Enron which
would become, as those following the climate-change debate in detail
now know, the biggest money plays: the rules governing emissions
trading, the rules governing transfers of emission reduction rights
between countries, and the rules governing a gargantuan clean energy
fund.
Palmisano’s memo expressed satisfaction bordering at amazement at
Enron’s successes. The rules governing transfers of emission rights “is
exactly what I have been lobbying for and it seems like we won. The
clean development fund will be a mechanism for funding renewable
projects. Again we won .... The endorsement of emissions trading was
another victory for us.”
Palmisano’s hard work had paid off, thanks to the many allies Enron had
enlisted. Deserving special emphasis was the environmental community,
whose endorsement was crucial to Enron’s achievements at Kyoto.
“Enron now has excellent credentials with many ‘green’ interests
including Greenpeace, WWF [World Wildlife Fund], NRDC [Natural
Resources Defense Council], German Watch, the U.S. Climate Action
Network, the European Climate Action Network, Ozone Action, WRI [World
Resources Institute] and Worldwatch. This position should be
increasingly cultivated and capitalized on (monetized),” Polisano
explained.
With this company, Enron had been propelled to a leadership position at
Kyoto. Palmisano had been given no less than three occasions for
speeches, including one on the role of business in promoting clean
energy, and he had received an award on behalf of Enron: The Climate
Institute honoured Kenneth Lay and Enron for their work promoting
clean-energy solutions to climate change — the other recipients were
Denmark’s energy and environment minister and the U.K.’s former
environment minister. As Palmisano noted: “Parenthetically, I heard
many times people refer to Enron in glowing terms. Such praise went
like this: ‘Other companies should be like Enron, seeking out
21st-century business opportunities,’ or ‘Progressive companies like
Enron are ...’ or ‘Proof of the viability of market-based energy and
environmental programs is Enron’s success in power and SO2 trading.’”
Palmisano’s three-page memo from Kyoto, which suggested that the Kyoto
Protocol could work out even better than he had expected, stressed the
need for urgency to capitalize on the opportunities that would now be
on offer: “I now predict ratification within three years. I predict
business opportunities within 18 months. I predict this agreement will
have very significant influences on the energy sector within OECD and
transitional economies and will accelerate renewable markets in
developing countries. This agreement will be good for Enron stock!!”
The groundwork had been laid well, not least by entering into
relationships with scientists who, Enron expected, would further its
cause (James Hansen, the scientist who more than any other is
responsible for bringing the possibility of climate-change catastrophe
to the public, was among the scientists Enron commissioned). Just as
shrewdly, Enron saw the importance in silencing the scientists who
didn’t accept the alarmism that had driven the Kyoto Protocol. In a
1998 letter, Enron CEO Ken Lay, among others, asked president Clinton
to appoint a bi-partisan “Blue-Ribbon Commission” designed to pronounce
on the science and, in effect, marginalize the skeptics.
The precise commission that Lay demanded didn’t happen but the general
marginalization of scientists did, and continues to occur to this day,
with great success. Scientists who question the Kyoto Protocol
invariably find themselves subject to public ridicule; all too often
they find they are unable to obtain funding for their research, or even
that their employment has been terminated.
Most of all, the skeptics are treated with suspicion, and accused of
having been in the pay of the energy industry. The public in good part
has accepted these accusations, its underlying assumption being that
the fossil-fuel industry has the most at stake in climate-change
policy. But if the public is to be skeptical of the influence that big
money has over global-warming science, it should take the temperature
anew, and recognize that the biggest money interest of all in the
climate change debate lies with those poised to cash in on the
climate-change policies of Kyoto and its successors.
Financial Post
lawrencesolomon@nextcity.com
Lawrence Solomon is executive director of Energy Probe and Urban
Renaissance Institute and author of The Deniers: The world-renowned
scientists who stood up against global warming hysteria, political
persecution, and fraud.
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