The irony is thick. Just months after the firm imploded and during a week that saw its senior executives slapped around by Congress, Enron’s fondest dreams have been made reality by President George W. Bush.
For years, Enron lobbied hard for U.S. ratification of the Kyoto Protocol on global warming or a domestic cap-and-trade policy for carbon dioxide, the leading greenhouse gas. The Kyoto plan would have required the U.S. to reduce its CO2 emissions to 7 percent below 1990 levels by the year 2012. A cap-and-trade program would attempt to accomplish the same or similar result by forcing coal-burning utilities to pay billions of dollars for permits to continue to emit CO2.
Enron wanted emissions trading for CO2 because caps would raise the market price of all energy. Enron supplied natural gas, and thus would reap tremendous profits both coming and going–from selling CO2 permits, and then from selling its own energy to American consumers at higher prices. Even after the U.S. Senate in 1997 unanimously rejected the Kyoto Protocol, Enron for years lobbied hard for Kyoto or a similar program that would enrich them and a few industry buddies at the expense of the American public.
When Bush announced his global warming program, Enron’s defrocked “masters of the universe” got the last laugh on the American public.
The Bush proposal would for the first time commit America to reducing carbon dioxide (CO2) and other so-called greenhouse gas emissions. Although the proposals create technically “voluntary” incentives, the incentives are created by a false market that caps permissible CO2 emissions, hands out massive taxpayer subsidies to companies that comply in reducing CO2 emissions, and allows companies to trade their suddenly valuable CO2 permits.
While the cap-and-trade approach is economically preferable to more arbitrary measures, the President’s approach nevertheless represents a misguided attempt to solve a nonexistent problem. Scientific evidence casts extreme doubt on global warming theory. Since the start of the industrial age, atmospheric CO2 concentrations have risen from 280 parts per million (ppm) to 370 ppm. Nevertheless, surface temperature readings indicate the planet warmed by merely a single degree Fahrenheit last century. The single degree of warming is well within the range of natural global temperature variations. Satellite sensors suggest that even this small increase is a false reading, caused by local sources of heat contaminating on-the-ground temperature stations.
The lack of scientific evidence in support of global warming theory is grounds enough to oppose any “global warming” policy. But equally compelling are the exorbitant costs involved in “solving” the nonexistent problem. The U.S. Energy Information Administration (EIA) estimates that gasoline prices would rise roughly 53 percent under Kyoto. The EIA further estimates that electricity prices would nearly double as a result of Kyoto. Wharton Economic Forecasting Associates estimate that home heating oil will rise 95 percent.
While Bush’s “cap and trade” program would be less expensive than Kyoto, the economic costs would still be formidable, especially regarding energy prices and the cost of expensive tax incentives given to industry. Moreover, Congress will surely incorporate more expensive “compromises” with Kyoto in addressing the proposal.
Finally, the announced Bush program’s effect on global temperatures would be minimal at best. Even assuming an alarmist global warming theory, the Kyoto Protocol would have had a barely detectable impact on global temperatures: 94 percent of the projected warming would still occur even if Kyoto were fully implemented. The watered-down Bush approach would be still less effective.
President Bush was absolutely right to withdraw the U.S. from further negotiations over the Kyoto Protocol, an unnecessary and hopelessly flawed treaty. But his “global climate strategy” is no more necessary than Kyoto … or, for that matter, a “global sunspot strategy” or a “global wind strategy.”
Global warming and emission trading should be allowed to follow Enron into the dustbin of history. The President, alas, seems determined to drag American workers and consumers to that destination as well.
James M. Taylor is managing editor of Environment & Climate News, a monthly publication of The Heartland Institute. He can be reached at [email protected].