“THIS AGREEMENT WILL BE GOOD FOR ENRON STOCK!” (Enron’s Kyoto memo turns 24) – Is that filling you up?

from masterresource

By Robert Bradley Jr. – December 15, 2021

Ed note: With Enron’s 20th anniversary in the news, the bottom of the company’s climate / energy strategy deserves another look. (Bradley’s personal experience is told here.)

This week a Hall of Shame business memo turned 24. It is dated December 12, 1997 and was written by Enron lobbyist John Palmisano in the aftermath of the Kyoto Protocol from Kyoto, Japan.

Global green planners were euphoric that the world had somehow embarked on an irreversible course of climate control (and thus control of industry and land use). But Kyoto predictably failed, expired, and the 2015 Paris Climate Agreement is wavering, with COP26 becoming a “Let’s Talk Next Year” at COP27.

Palmisanos Memo names the advantages for the “green” first mover Enron. In fact, Enron had no fewer than six profit centers tied to carbon dioxide (CO2) pricing – and seven if carbon was capped and traded.) The story of Enron as the favorite firm of leftist environmentalists has been well told elsewhere.

The Washington Post broke the memo shortly after Enron’s death, showing that Enron was not a capitalist company in the free market. “[Enron] Chairman pushed the firm’s agenda with Clinton in the White House. ”In fact, Enron was“ the company most responsible for starting the civil war in the hydrocarbon business ”. [Jeremy Leggett, The Carbon War (Penguin: 1999), p. 204.]

The Kyoto Protocol has long passed its expiry date 2008–2012 (see here and here). But Palmisano’s memo, a classic in the history of political capitalism in action, lives on.


to: 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

from: John Palmisano

date: December 12, 1997

Subject: Effects of the climate protection agreement in Kyoto and what happened

This memo summarizes the implications of the Kyoto agreement and also describes what I did and makes some observations.


If this agreement is implemented, Enron’s business will be boosted more than almost any other regulatory initiative outside of the restructuring of the energy and gas industries in Europe and the United States. The potential for additional gas sales and additional demand for renewable technology is enormous. In addition, a CO2 emissions trading system is being developed. Although the trading system will be implemented by 2008, I am sure that the reductions will start in 1-2 years. Finally, Enron has immediate business opportunities that arise directly from this agreement.

On the political front: There will be a large number of country-specific and international meetings on every aspect of this agreement. I believe it is impossible to overestimate the importance of this year in shaping all aspects of the agreement.

Three topics that are of particular importance to Enron are: (1) the rules for emissions trading, (2) the rules for the joint implementation within Annex-1 and (3) the rules for the proposed clean energy fund ( which puts the GEF in the shade) as a fund for wind, solar and power plant conversions.)

On the business front: Over the next year there will be intense positioning of organizations to get an early lead in a variety of carbon trading businesses.

Advocating joint implementation under Annex-1 is exactly what I was campaigning for and it seems like we have won.

Clean development will be a mechanism for funding renewable projects. We won again. (We must press for natural gas firing to be one of the technologies that the Fund will give preference to.)

The endorsement of emissions trading was another victory for us.

Highlights of the agreement

38 industrialized countries must reduce greenhouse gas emissions to or below the 1990 level by 2012.

The reduction target in the USA is 7%, in the European Union 8% and in Japan 6%; Hence, it is not possible (or at least credible) that Congress can say that the United States is comparatively disadvantaged compared to its major trading partners or competitors because the EU and Japan have higher control targets and are more “carbon-lean” than we are.

Six gases are included (CO2, CH4, N2O, HFCs, PFCs and SF6).

Emissions trading is included. Details of an international system are to be worked out in 1998.

A “clean development fund” is included. The fund would enable emissions compensation from projects in developing countries.

The joint implementation for Annex-1, industrialized countries and transition economies is included. This means that Enron projects in Russia, Bulgaria, Romania or other Eastern countries can be partially monetized by capturing CO2 reductions for sale in the US or other Western countries.

I don’t have the final version of the agreement, but I do have the first and second versions. The latest version is not available on the World Wide Web.

What I was involved in

I made three speeches and received an award on Enron’s behalf. The speeches focused on emissions trading, energy efficiency / renewables and the role of business in promoting clean energy outcomes. The award came from the Climate Institute and went to Ken Lay and Enron for our work promoting clean energy solutions to climate change. The other recipients were Sven Auken, MP and Minister for Energy and Environment in Denmark, and MP and former UK Environment Minister John Gummer.

I’ve met Gummer and Auken several times and it was nice for them to hear how Enron was praised. (I gave a speech with Gummer last Saturday and it was the third time we stood on the podium together. He is someone who still has considerable influence in the UK and Europe and that Enron may wish to cultivate.)

I was also involved in a press conference.


I believe that it will be impossible to separate electricity conversion from climate change as a domestic political issue. The administration has expressed its view that the two issues are intertwined.

At yesterday’s press conference in the White House, this connection was underlined by the comments of Tom Kasten, President of the Trigen Corporation, who spoke out in favor of the climate protection agreement and its link with restructuring. His remarks had to be clarified by the White House.

These remarks are fully in line with every other signal from the government climate team.

Thanks to our involvement in climate protection initiatives, Enron now has excellent references in many “green” interests, including Greenpeace, WWF, NRDC, GermanWatch, the US Climate Action Network, the European Climate Action Network, Ozone Action, WRI and Worldwatch. This position should be cultivated and capitalized (monetized) more intensively.

(As an aside, I’ve often heard people refer to Enron in ardent terms. Such praise has been, “Other companies should be like Enron and look for business opportunities in the 21st century,” or “Progressives like Enron are …” the viability of market-based energy and environmental programs is Enron’s success in electricity and SO2 trading. “)

Developing countries have gained considerable bargaining power. The transfer of bargaining power to India, Brazil, China and the G-77 was gradual and clear.

The EU negotiated as a group. Until two years ago they negotiated as individual countries. Even if the interests of individual countries persist, the EU retains considerable power in working together. It was this cohesion that resulted in a stricter agreement.

EU delegates asked for my contribution to the agreement to reject some of the positions taken by some US delegates. The USA in particular did not advocate any rules for trading in CO2 emissions, as rules would “inhibit” trade. My position is that rules governing who owns which discounts, how discounts are traded, how they are tracked, and liability rules will encourage trading as rules give both buyers and sellers more confidence in the goods.

While some companies and trade associations continue to criticize developing countries for not doing more, no company wants to get specific on this issue. In so far as companies do this, they will hide under the protection of a trade association. I think this shield will be pierced soon. I believe some companies will soon break the line that developing countries should do more. It is a weak position on justice and suicide for their commercial interests in these countries.

An increasingly ugly trend can be seen for the environmental NGO community and the delegates from developing countries. They see the developing country involvement argument as a barely disguised reuse of the early 20th century scare tactics marked by the so-called “yellow threat” or the invasion of the United States by Asian peoples.

Developing country delegates see the carbon lobby’s argument that the US will lose markets to developing countries as empty and racist – they see energy-intensive imports to the US from Japan and Germany in terms of cars (and that’s high-priced energy). Areas), while economic growth in developing countries is driven by local growth or western industries that require low labor costs, low land costs, or flexibility for new facilities.

Enron should not be involved in such disputes as it will undermine our credibility with developing countries, NGOs and industrialized governments.

I should have a copy of the agreement today.

The next year will be very intense because the structure of the agreement is in place, business opportunities are defined, the rules for emissions trading are being developed and it will be important to identify, finance and manage JI projects.

One final point, Terry, if you remember, I predicted an agreement that would result in a 5% reduction by 2010; we had reached 7% by 2012. I now forecast ratification within 3 years. I forecast business opportunities within 18 months. I expect this agreement to have a very significant impact on the energy sector within OECD and transition economies and accelerate renewable energy markets in developing countries.

This agreement will be good for Enron stock !!


Like this:

Like Loading…

Comments are closed.