“THIS AGREEMENT WILL BE GOOD FOR ENRON stock!!” (Enron’s Kyoto Memoir Turns 24) – Are you enjoying it?
By Robert Bradley Jr. – December 15, 2021
Ed notes: With news of the 20th anniversary of Enron’s demise, the underside of the company’s climate/energy strategy deserves another look. (Bradley’s personal experience is recounted here.)
This week, a business memo by the Hall of Shame turned 24 years old. December 12, 1997, it was written from Kyoto, Japan, by lobbyist Enron John Palmisano in the glory of the Kyoto Protocol.
Global green planners were excited that, By some way, somehow, the world has embarked on an irreversible process of climate control (and therefore industrial and land use control). But predictably, Kyoto failed, expired, and the 2015 Paris climate accord entered into force, with COP26 turning into “let’s talk next year” at COP27.
Palmisano’s memo cites benefits for the first to go ‘green’ Enron. Enron, in fact, no less six profit centers tied to carbon dioxide (CO2) pricing –and seven if CO2 is capped and traded.) The story of Enron as the beloved company of Leftist environmentalists is well told other places.
The Washington Post broke the memo shortly after Enron’s death, showing how Enron was hardly a capitalist, free-market company. “[Enron] The President Pushed the Firm Agenda with the Clinton White House. Indeed, Enron is “the company most responsible for sparking a greenhouse civil war in the hydrocarbon business.” [Jeremy Leggett, The Carbon War (Penguin: 1999), p. 204.]
The Kyoto Protocol has passed its expiration date 2008–2012 (see here and here). But Palmisano’s memoir, a classic in the working history of political capitalism, persists.
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Arrive: Terry Thorn, Joe Hillings, Cynthia Sandherr, Jeff Keeler, Fiona Grant, Hap Boyd, Bill Shoff, Dan Badger, Tom Kearney, Lynda Clemmons, Bruce Stram, Mike Terraso, Rob Bradley, Jim O’Neill, John Hardy
Are from: John Palmisano
Day: December 12, 1997
Subject: Impacts of the Kyoto Climate Agreement & What Happened
This memo summarizes the significance of the agreement reached in Kyoto and also describes what I did and provides some observations.
Implications
If executed, the deal will do more to boost Enron’s business than virtually any other regulatory initiative beyond restructuring Europe’s energy and natural gas industries. and the United States. The potential for additional gas sales and additional demand for renewable technology is huge. In addition, a carbon emission trading system will be developed. While the trading system will be in place in 2008, I’m sure the cuts will start trading in 1-2 years. Finally, Enron has immediate business opportunities that come directly from this agreement.
On the policy front: There will be many country- and international-specific meetings related to every aspect of this agreement. I don’t think it’s possible to overestimate the importance of this year in shaping every aspect of the deal.
Three issues of particular importance to Enron are: (1) rules governing emissions trading, (2) rules governing general performance in Annex-1, and (3 ) proposed clean energy fund management rules (promising to constrain GEF as a fund for wind, solar and power plant conversions.)
On the business front: In the coming year, there will be a strong positioning of institutions to take the lead in a range of carbon trading businesses soon.
The endorsement of joint practice in Appendix-1 is exactly what I lobbied for and it looks like we won.
Clean development is the funding mechanism for renewable projects. Again, we won. (We need to promote natural gas burning as one of the technologies favored by the fund.)
The endorsement of the emissions trade is another win for us.
Highlights of the Agreement
38 developed countries are required to reduce their greenhouse gas emissions to or below 1990 levels by 2012.
The reduction target of the United States is 7%, the European Union is 8% and Japan is 6%; therefore, it is not possible (or at least reliably) that Congress can say that the United States is at a disadvantage relative to its main trading partner or competitor because the EU and Japan have goals. higher control goals and more “carbon- leaner than us.
Six gases are included (CO2, CH4, N2O, HFCs, PFCs and SF6).
Emissions trading is included. Details of an international system will be finalized by 1998.
A “clean development fund” is included. The fund will enable offsetting emissions from projects in developing countries.
Includes common implementation for Annex-1, developed countries and economies in transition. This means that Enron’s projects in Russia, Bulgaria, Romania or other eastern countries can partially monetize by capturing reduced carbon for resale in the US or other Western countries.
While I don’t have the final version of the agreement, I do have the first and second versions. The latest version is not available on the global web.
What I’ve been involved in
I gave three speeches and received awards on behalf of Enron. Speeches covered emissions trading, efficient/renewable energy use and the role of business in promoting clean energy outcomes. Award given by the Climate Institute to Ken Lay and Enron for our work promoting clean energy solutions to climate change. The other recipients are Sven Auken, MP and Minister of Energy and Environment in Denmark, and UK MP and former Environment Secretary, John Gummer.
I’ve met Gummer and Auken a few times before and it’s been a pleasure to hear Enron rave about so much. (I gave a speech to Gummer last Saturday and this is the third time we’ve stood on the podium together. He’s a man who retains considerable influence in Britain and Europe and who Enron might want to hone.)
I also participated in a press conference.
Observe
I believe that it is impossible to separate power restructuring from climate change as a domestic political issue. The government has shown its position that these two issues are intertwined.
At yesterday’s White House press conference, this connection was underscored by comments from Tom Kasten, President of the Trigen Group, who spoke in favor of the deal on climate change and its link. it with restructuring. His comments must be deleted by the White House.
These remarks are entirely in line with every other signal from the Environmental Administration’s climate change team.
Through our involvement with climate change initiatives, Enron now has a certificate of excellence with many “green” benefits including Greenpeace, WWF, NRDC, GermanWatch, Climate Action Network USA, European Climate Action Network, Ozone Action, WRI and Worldwatch. This position needs to be increasingly cultivated and utilized (earned).
(Aesthetically speaking, I’ve heard many times people refer to Enron with the phrase glow. Compliments like these: “Other companies should, like Enron, learn 21st business opportunity of the century” or “Progressive companies like Enron are…. ” or “The proof of viability of market-based energy and environmental programs is Enron’s success in the SO2 and energy business.”)
Developing countries have gained considerable negotiating power. The shift of negotiating power to India, Brazil, China and the G-77 has taken place gradually and clearly.
The EU negotiated as a group. Until two years ago, they were negotiating as individual countries. While it still has its own national interests, the EU retains considerable power when it comes to working together. It was this cohesion that led to a tighter agreement.
The EU delegates asked me to comment on the agreement to oppose some of the positions that some US delegates espoused. In particular, the United States favors no rules governing carbon emissions trading because the rules would “prevent trading.” My view is that the rules that define who owns what discounts, how the discounts are traded, how they are tracked, and liability rules should help drive trading because the rules giving both buyers and sellers more confidence in the goods.
While a number of companies and trade associations continue to criticize developing countries for not doing more, none wanted to be specific on the issue. To the extent any company can, they will hide under the shield of a trade association. I think that shield will soon be pierced. I believe some companies will soon go beyond the boundaries that developing countries should do more. It is a weak position in terms of equity and suicide in terms of their commercial interests in these countries.
An increasingly bad trend has become apparent to the community of environmental NGOs and representatives from developing countries. They see the argument for developing country participation as a thinly disguised recycling of the early twentieth-century fear characterized by the so-called “yellow peril” or invasion of the United States. of the peoples of Asia.
Delegates from developing countries consider the carbon lobby’s argument that the US will lose its market to developing countries as empty and racist – they argue that energy-intensive imports U.S. imports come from Japan and Germany for automobiles (and these are regionally high-cost energy sources), while economic growth in developing countries is driven by local or regional growth. Western industry requires low labor costs, low land costs or allows flexibility for new factories.
Enron should not get involved in any debate like this because it damages our credibility with developing countries, NGOs and developed country governments.
I should have a copy of the agreement today.
Next year will be complicated as the structure of the agreement already exists, business opportunities are being identified, rules governing emissions trading will be developed and the identification, financing and management of emissions will be developed. JI projects will be very important.
One last point, Terry, if you remember, I was predicting a deal to drop 5% in 2010; we got 7% in 2012. Now I predict ratification within 3 years. I predict business opportunities within 18 months. I predict this agreement will have huge effects on the energy sector in the OECD and economies in transition, and will boost the renewable energy market in developing countries.
This deal will be good for Enron stock!!
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