By Robert Bradley Jr. — December 12, 2022
This week, a Corridor of Disgrace enterprise memo turns a quarter-century previous. Dated December 12, 1997, it was written from Kyoto, Japan, by Enron lobbyist John Palmisano within the afterglow of the Kyoto Protocol settlement.
World inexperienced planners had been euphoric that, by some means, someway, the world had launched into an irreversible course of local weather management (and thus industrial and land-use management). However Kyoto predictably failed, and the Paris local weather accord of 2015 teeters, with COP27’s current failure making COP28’s prospects look grim.
Palmisano’s memo cites the advantages for first-mover ‘inexperienced’ Enron. Enron, actually, had a minimum of six revenue facilities tied to pricing carbon dioxide (CO2)–and 7 if CO2 had been capped and traded. The story of Enron because the darling of Left environmentalists has been effectively advised elsewhere.
The Washington Submit broke the memo quickly after Enron’s demise, displaying how Enron was hardly a free-market, capitalistic firm in “[Enron] chairman Pushed Agency’s Agenda With Clinton White Home.” Certainly, Enron was “the corporate most answerable for sparking off the greenhouse civil warfare within the hydrocarbon enterprise,” as advised by Jeremy Leggett in The Carbon Conflict (Penguin: 1999), p. 204.
The Kyoto Protocol is way previous its expiration date of 2008–2012 (see right here and right here). However Palmisano’s memo, a traditional within the historical past of political capitalism, lives on.
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To: Terry Thorn, Joe Hillings, Cynthia Sandherr, Jeff Keeler, Fiona Grant, Hap Boyd, Invoice Shoff, Dan Badger, Tom Kearney, Lynda Clemmons, Bruce Stram, Mike Terraso, Rob Bradley, Jim O’Neill, John Hardy
From: John Palmisano
Date: December 12, 1997
Topic: Implications of the Local weather Change Settlement in Kyoto & What Transpired
This memo summarizes the implications of the settlement reached in Kyoto and likewise describes what I used to be doing and supplies some observations.
Implications
If applied, this settlement will do extra to advertise Enron’s enterprise than will virtually some other regulatory initiative exterior of restructuring of the power and pure gasoline industries in Europe and the US. The potential so as to add incremental gasoline gross sales, and extra demand for renewable expertise is big. As well as, a carbon emissions buying and selling system can be developed. Whereas the buying and selling system can be applied by 2008, I’m positive that reductions will start to commerce with 1-2 years. Lastly, Enron has fast enterprise alternatives which derive straight from this settlement.
On the policy-front: There can be a large number of country-specific and worldwide conferences associated to each facet of this settlement. I don’t assume it’s potential to overestimate the significance of this yr in shaping each facet of the settlement.
Three problems with particular significance to Enron are: (1) the foundations governing emissions buying and selling, (2) the foundations governing joint implementation inside Annex-1, and (3) the foundations governing the proposed clear power fund (which guarantees to dwarf the GEF as a fund for wind, photo voltaic, and energy plant conversions.)
On the enterprise entrance: Throughout the subsequent yr there can be intense positioning of organizations to seize an early lead in a wide range of carbon buying and selling companies.
The endorsement of joint implementation inside Annex-1 is strictly what I’ve been lobbying for and it looks as if we received.
The clear improvement can be a mechanism for funding renewable tasks. Once more, we received. (We have to push for pure gasoline firing to be included among the many applied sciences that get preferential remedy from the fund.)
The endorsement of emissions buying and selling was one other victory for us.
Highlights of the Settlement
38 developed nations are required to cut back greenhouse gasoline emissions to or beneath 1990 ranges by 2012.
The U.S. discount goal is 7%, the European Union is 8%, and Japan is 6%; due to this fact, it’s not potential (or not less than credible) that Congress can say the US is at a comparative drawback vis-à-vis its essential buying and selling companions or rivals because the EU and Japan have larger management targets and are extra “carbon-lean” than are we.
Six gases are included (CO2, CH4, N2O, HFCs, PFCs, and SF6).
Emissions buying and selling is included. Particulars of a global system are to be labored out in 1998.
A “clear improvement fund” is included. The fund would enable for emission offsets from tasks in growing nations.
Joint implementation for Annex-1, developed nations and the transitional economies, is included. Because of this Enron tasks in Russia, Bulgaria, Romania or different jap nations may be monetized, partially, by capturing carbon reductions on the market again within the US or different Western nations.
Whereas I don’t have the ultimate model of the settlement, I do have the primary and second variations. The most recent model isn’t on the world-wide net.
What I Was Concerned In
I gave three speeches and obtained an award on behalf of Enron. The speeches handled emissions buying and selling, power effectivity/renewable, and the function of enterprise in selling clear power outcomes. The award got here from the Local weather Institute and was for Ken Lay and Enron for our work selling clean-energy options to local weather change. The opposite recipients had been Sven Auken, MP and Minister for Power and Setting in Denmark, and MP and former Setting Minister for the UK, John Gummer.
I’ve met Gummer and Auken a number of occasions earlier than and it was good for them to listen to Enron praised a lot. (I gave a speech with Gummer final Saturday and it was the third time we’ve been on the rostrum collectively. He’s somebody who nonetheless retains appreciable affect within the UK and Europe and somebody Enron would possibly wish to domesticate.)
I used to be additionally concerned in a press convention.
Observations
I imagine that will probably be unattainable to separate electrical energy restructuring from local weather change as a home political concern. The administration has signaled its view that the 2 points are intertwined.
At yesterday’s White Home press convention, this connection was underlined by the feedback from Tom Kasten, President of Trigen Company who spoke in favor of the local weather change settlement and its linkage to restructuring. His remarks needed to be cleared by the White Home.
These remarks are fully in step with each different sign from the Administration’s local weather change group.
By our involvement with the local weather change initiatives, Enron now has wonderful credentials with many “inexperienced” pursuits together with Greenpeace, WWF, NRDC, GermanWatch, the US Local weather Motion Community, the European Local weather Motion Community, Ozone Motion, WRI, and Worldwatch. This place must be more and more cultivated and capitalized on (monetized).
(Parenthetically, I heard many occasions folks discuss with Enron in glowing phrases. Such reward went like this: “Different firms must be like Enron, looking for out 21st century enterprise alternatives” or “Progressive firms like Enron are….” Or “Proof of the viability of market-based power and environmental applications is Enron’s success in energy and SO2 buying and selling.”)
Growing nations have acquired substantial negotiating energy. The shift in negotiating energy to India, Brazil, China, and the G-77 has been gradual and pronounced.
The EU negotiated as a bunch. Till two years in the past, they negotiated as particular person nations. Whereas there are nonetheless particular person nation pursuits, the EU retains substantial energy when working collectively. It was this cohesiveness that result in a extra stringent settlement.
EU delegates requested for my enter into the settlement to oppose a few of the positions espoused by some US delegates. Particularly, the US was advocating no guidelines governing the buying and selling of carbon emissions as a result of guidelines would “inhibit buying and selling.” My place is that guidelines defining who owns what reductions, how reductions are traded, how they’re tracked, and legal responsibility guidelines will assist promote buying and selling since guidelines give each consumers and sellers extra confidence within the commodity.
Whereas some firms and commerce associations proceed to criticize growing nations for not doing extra, no firm desires to be particular on this concern. To the extent any firm does, they’ll conceal beneath the protect of a commerce affiliation. I feel that protect will quickly be pierced. I imagine that some firms will quickly break from the road that growing nations ought to do extra. It’s a weak place by way of fairness and suicidal by way of their business pursuits in these nations.
An more and more ugly pattern has change into evident to the environmental NGO group and the delegates from growing nations. They see the argument about growing nation participation as a thinly disguised recycling of the early twentieth century fear-mongering characterised by the so-called “yellow-peril” or invasion of the US by Asian peoples.
The growing nation delegates see the argument of the carbon foyer that the US will lose markets to growing nations as empty and racist—they see energy-intensive imports to the US coming from Japan and Germany by way of vehicles (and these are excessive price power areas), whereas financial progress in growing nations is fueled by native progress or Western industries requiring low price of labor, low price for land, or allowing flexibility for brand spanking new crops.
Enron mustn’t take part in any argument like this as a result of it hurts our credibility with growing nations, NGOs, and developed nation governments.
I ought to have a duplicate of the settlement as we speak.
The subsequent yr can be very intensive as a result of the construction of the settlement exists, enterprise alternatives are being outlined, the foundations governing emissions buying and selling can be developed, and figuring out, financing, and managing JI tasks can be vital.
One closing level, Terry, should you bear in mind, I predicted an settlement that might yield a 5% discount by 2010; we bought 7% by 2012. I now predict ratification inside 3 years. I predict enterprise alternatives inside 18 months. I predict this settlement could have very important influences on the power sector inside OECD and transitional economies and can speed up renewable markets in growing nations.
This settlement can be good for Enron inventory!!
