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Enron bet on the wrong horse

By Henry Lamb
web posted January 21, 2002

Enron was one of the early members of the Global Climate Coalition, formed in 1989 by a group of corporations that were concerned about the likelihood of global regulation of energy production, by a United Nations bureaucracy emerging from the global warming hysteria, fanned by then-Senator Al Gore. In the mid 1990s, Enron, along with Shell and BP (British Petroleum), pulled out of the coalition and began plotting a new strategy.

Did Enron see the light, and decide that global regulation was required to save the world from catastrophic global warming? Or did they see the wisdom of owning and controlling the resources that would be required by the world, when fossil fuel use was regulated and eventually banned?

In the early 1990s, Maurice Strong called his friend Stephen Schmidtheiny, a Swiss industrialist, and together they created the World Business Council for Sustainable Development. Enron was an early participant. Strong was CEO of Canada's Hydro-Electric, a major electricity supplier that was a prime target for acquisition by several large corporations - among which was Enron.

Kenneth Lay
Lay

Kenneth Lay, Enron Chairman, was tapped by the Clinton administration to represent industry on The President's Council on Sustainable Development (PCSD) in 1993, along with Carol Browner, EPA Administrator, and Timothy Wirth, Undersecretary for Global Affairs, and several other Cabinet level officials. The purpose of the PCSD was to translate Agenda 21 recommendations in the public policy - recommendations that were adopted, along with the U.N. Framework Convention on Climate Change, at the U.N.'s 1992 Earth Summit in Rio de Janeiro, which was headed by Maurice Strong.

Timothy Wirth headed the U.S. delegation to the U.N. Climate Change negotiations, and Eileen Claussen, his Undersecretary, was the hands-on negotiator. Just before the 1997 Kyoto conference, Wirth left the government, to administer the $1 billion grant Ted Turner gave to the United Nations. Claussen resigned shortly thereafter to head the Pew Center on Global Climate Change, in which Enron was a member and strong supporter.

While Enron, and the various organizations it supported, sang the politically correct songs of global gloom and doom, Enron was posturing itself to benefit from the regulations that would follow the implementation of the Kyoto Protocol.

When George Bush announced that he would not seek a "multiple pollutant" regulatory policy, which had been urged by Enron, and when George Bush announced that he would withdraw from the Kyoto Protocol, Enron realized that the $113,800 they had invested in the Bush campaign, was wasted.

Congressman Henry Waxman (D-CA) is already hurling blame-grenades, trying to smear the Bush administration with some imagined impropriety, linked to Enron's contributions. In light of Bush's policy, the contributions to Bush had no impact.

If blame has to be assigned, it should be focused on the "Public/Private Partnerships" promoted by the Clinton administration.

Five days after giving the Democratic National Committee $100,000, Enron executives were on a "trade junket" with then-Secretary of Commerce Ron Brown. Enron netted more than $500 million in government assistance through contracts with foreign governments. In 1998, the EPA awarded Enron its "Climate Protection Award," for "exemplary efforts and achievements in protecting the global climate." The award was a public pat on the back for Enron's position shift on climate policy.

Having attended almost all of the U.N. climate change meetings since 1996, I saw first hand the pressure that was applied to major corporations by the Clinton administration. To put it bluntly, the Clinton administration told major corporations, such as Enron, that they intended to regulate carbon emissions one way or the other, and that by entering into a "partnership," they would get special treatment and special benefits. Corporations that chose not to participate were put on notice that the feds could make their life miserable with "multimedia" (simultaneous action by several agencies) inspections and enforcement programs.

Seeing the writing on the wall, it is not surprising that Enron chose to play ball with the Clinton administration while getting its ducks in a row to profit from the anticipated regulatory policy.

Lost in the whole affair, is the question about the validity of the proposed regulations in affecting global climate. When Strong's Council on Sustainable Development, and Claussen's Pew-funded Center on Global Climate assembled some of the world's most powerful corporations, profit - not the environment - became the compelling force that drove climate policy.

Enron is only the first to fall among several corporations that put their faith in global regulatory policy to produce corporate profits. Other companies may not have been as heavily invested as Enron, but several of Claussen's and Strong's buddies are feeling pain.

And they should. Enron's fall is a classic example of the danger of allowing government to manage the market. As bad as Enron's disaster is for its employees and investors, it is not as bad as it might have been, had Mr. Gore been elected, and the whole world forced - unnecessarily - to pay tribute to Enron in the form of government-forced alternative energy.

Government should let the market decide when and how alternative energy sources are to be developed. When corporations "partner" with government to force the market to buy selected or approved products, everyone suffers; consumers in the short run, and in the long run, like Enron, government's partners.

Henry Lamb is the executive vice president of the Environmental Conservation Organization, and chairman of Sovereignty International.

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