Abstract: Enron and the Kyoto Protocol: U.S. Climate Change Policy in the Making in the 1990s

Yda Schreuder

Abstract

More than two decades before President Barack Obama made ''cap-and-trade'' of carbon dioxide emissions a household term, Enron had become a big-time trader in energy commodities and had made millions in a cap-and-trade program of sulphur dioxide emissions. Enron Chairman Kenneth Lay saw another profit-making opportunity when Bill Clinton and Al Gore were inaugurated, as he capitalized on Gore's push to combat global warming. Enron immediately embarked on a massive lobbying effort to develop a trading system for carbon dioxide. In the summer of 1997, prior to the signing of the Kyoto Protocol, Lay became a member of President Clinton's Council on Sustainable Development. Enron had been propelled to a leadership position at Kyoto almost overnight, but the groundwork had been laid carefully by entering into relationships with scientists like James Hansen, who, Lay expected, would further Enron's cause and share price. Enron was making billions of dollars in profit from sales of natural gas and distribution and realized that, as the main international and domestic trader in the new world of carbon credits, the company could realize unimagined wealth. Coal-burning utilities would have to pay billions for permits because they emit more CO2 than do natural gas facilities. This would encourage closing coal plants in favor of natural gas plants, driving up their profit margins. Of course, the Kyoto Protocol was never ratified, and we can only speculate about Enron's future earnings as the company went bankrupt in 2001.