Friday, December 2, 2011

Enron on Cap-and-Trade (ENE)

First posted July 20, 2007

Posting Eileen Claussen's op-ed piece (below) reminded me that the Pew Center had invited Enron's Ken Lay to join their Business Environmental Leadership Council, which invite he jumped at, Enron was going to make a killing in post-Kyoto cap-and-trade.

That leads me to one of my favorite links in the vault, the transcript of a March 3, 2000 (21 months to the really big bankruptcy filing) roundtable discussion "Domestic Emissions Trading of Greenhouse Gas Credits". Batting lead-off, the Senator from GE's home state, Joltin' Joe Lieberman. More interestingly though (sorry, Joe it's true), batting cleanup, the Enron representative really does come across as "The Smartest Guy in the Room" (that ENE link is kinda funny, in a morbid sort of way)

  • II. Opening Remarks
    Senator Joseph Lieberman (D-CT)

  • III. Presentations by Panelists
    Dan Lashof, Natural Resources Defense Council
    Joe Goffman, Environmental Defense
    John Palmisano, Enron Corporation
    Jon Naimon, Light Green Advisors
    Ray Kopp, Resources for the Future
    Sue Gander, Center for Clean Air Policy

  • John Palmisano, ENE:
    MR. PALMISANO: I'll choose to sit and I'll choose to be brief.
    Let me make some quick comments on the general subject of early crediting. Sometimes we confuse the words "crediting," "allowance trading," and "emissions trading." In fact, in the PPI paper, "credit" is used when the right word should be "quota," "allowance," or "allocation." Clarity in language is important because credit and allowance systems develop according to different regulatory paths.
    Both "credit" trading systems and "quota" trading systems produce very good environmental and economic results, end of story. However, with these programs, we are creating property rights, we are creating money, and that's a fact. The companies that will receive the allocations are going to have an off-book asset, and that is a fact too. That is why care in describing these systems is important we are creating the environmental equivalent of money.

    I'd commend everyone to look at the Heinz Center study that was done about two- and-a-half years ago. This study was funded by a variety of different sources and looked at, among other issues, the question of what the potential windfall profits could be for selected companies and sectors. No company today has greenhouse gas credits or quotas on their financial books, to the best of my knowledge. Greenhouse gas quotas will be an off-book asset, so some companies are going to get a windfall financial gain.
    Is that a bad thing? I don't think so, because in the long run we're probably going to achieve a good environmental outcome. However, in the short-run, a lot of money on the table certainly attracts lots of people's interest. That's the political reality in the world that I live in. And when you're allocating a $100 billion pie, or in fact, a potentially larger pie than that, even a small slice of that pie is pretty valuable....MUCH MORE (it's a four de force of a pitch)

    Man they were set to game that Kyoto sucker.