“The fact is that the greatest crimes are caused by excess and not by poverty. Men do not become tyrants in order that they may not suffer cold.” (Aristotle, Politics, Book 2)

January 21, 2002

Enron cash got access to Bush, but not results

By Patrice Hill
THE WASHINGTON TIMES

Enron Chairman Kenneth L. Lay was instrumental in persuading President Bush during the 2000 campaign to say global warming is a problem, but the giant energy company later was frustrated in its efforts to get the administration to do anything major to combat it.

Enron's experience on global warming, which was one of the embattled corporation's top lobbying priorities, illustrates how big campaign donations can gain business executives access to political power at critical times, but they are no guarantee of action.

During the campaign, Mr. Lay, who with more than $600,000 in contributions to Bush campaigns since 1993 is the president's top donor, prevailed upon his friend to discuss global warming with Fred Krupp, executive director of Environmental Defense, according to several sources with knowledge of the meeting.

Mr. Krupp and Mr. Lay knew each other from being on the board of the Heinz Center, an environmental think tank, with Alcoa Chairman Paul H. O'Neill, who was soon to become Mr. Bush's Treasury secretary and a strong advocate for dealing with global warming within the administration.

In the summer of 2000, Mr. Bush had not adopted a position on global warming. Mr. Krupp was pushing a proposal that he considered business-friendly to impose first-ever controls on the emissions of carbon dioxide thought to cause a warming of the Earth's atmosphere.

The proposal would cap the carbon emissions and three other pollutants produced by power plants, then allow the plants to buy and sell emissions credits to achieve the required reductions in the most economically efficient way.

Enron was an enthusiastic supporter of this "market" approach to cutting carbon emissions. It stood to benefit greatly as an operator of natural gas pipelines, because the carbon cap would force many coal-fired power plants to switch to natural gas, a cleaner-burning fuel with far less carbon emission.

Even more important, Enron hoped to become a major player in the system for trading emissions credits envisioned under the proposal. The energy giant's revenue increasingly came from its growing trading business, and it was already a major player in the futures markets for such commodities as electricity and gas.

The cap on power plants was a more limited version of the worldwide emissions trading system that Enron had lobbied top Clinton officials to include in the Kyoto global warming treaty rejected by Mr. Bush but championed by his opponent, Al Gore.

Mr. Bush liked the businesslike approach of the proposal, as well as its environmental appeal. Soon after the meeting, he started talking for the first time in the campaign about his concerns about global warming. And when he released his campaign's energy plan in the fall, it included the carbon-cap proposal.

White House spokeswoman Claire Buchanan said Mr. Bush adopted the proposal because "he believed it was the right policy" at the time, though he later withdrew it. She could not confirm Mr. Krupp's role in bringing the proposal to Mr. Bush's attention.

Enron and its environmental allies were ecstatic. Though it was not as ambitious as the Kyoto treaty, they viewed the cap as a practical way of achieving the emissions reductions that would be mandated by the treaty.

Mr. Gore and the Environmental Protection Agency under President Clinton had explored imposing a cap on carbon emissions, using existing authorities under the Clean Air Act. But they never proposed a mandatory cap.

The Kyoto treaty was unpopular in Congress, and lawmakers had barred the EPA from making any backdoor attempts to implement the treaty before the Senate ratified it.

By persuading Mr. Bush to address global warming as a problem and include the carbon cap in his campaign platform, Enron and its environmental allies believed they had bypassed the political obstacles posed by the Kyoto treaty and given new life to carbon controls in Congress.

Indeed, by the time Mr. Bush took office a year ago, proposals to cap carbon were popping up everywhere in Congress. Even the Clinton administration, emboldened by the Bush proposal, had issued an eleventh-hour regulation to cap carbon with other power-plant emissions.

Enron hailed the increasingly friendly climate for carbon controls in a document laying out its lobbying strategy dated January 2001.

"Agreement between industry, regulators and environmental groups" has emerged on the need for controls, said the lobbying documents for the Clean Power Group, partly funded by Enron. "The Bush platform included a commitment to future emissions caps [and] implementation through a cap and trade program."

Enron judged most of the proposals that had cropped up as not stringent enough, however, because they would not force utilities to retire aging coal-fired plants that spew the most carbon into the air. Those coal plants produce about half the nation's power, and their retirement would create a huge market for cleaner-energy companies such as Enron.

The lobbying group, which also included Calpine, El Paso, Trigen Energy, NiSource and PG&E National Energy Group, drafted its own carbon-cap plan to force the retirement of more aging coal plants. It said its goal was to win the endorsement of the incoming administration and Republican moderates in Congress.

But Enron was soon to be disappointed. Mr. Bush had not discussed his carbon-cap proposal with conservative supporters, who were enraged that he included it in his campaign platform without consulting them. But the conservatives held their fire until after the election.

Conservative groups such as the Cooler Heads Coalition joined with coal interests and other businesses opposed to carbon controls to put tremendous pressure on Mr. Bush to withdraw the carbon proposal as soon as he took office. The proposal had gained Mr. Bush little support from environmental groups and had become a major liability with his core constituencies.

Conservatives won over a key ally in White House Economic Adviser Lawrence Lindsey, who believed the carbon cap would put a crimp on economic growth and energy development when the nation was enduring a scarcity of fuels.

Within months of taking office, Mr. Bush announced he was dropping the carbon-cap proposal, which he said had been a mistake, and for the same reasons he opposed the Kyoto treaty: It was not good for the U.S. economy.

"When Bush came out and said he wouldn't do it, Lay was floored," said one source close to the company. "The lesson from this is that money gets you access, but not results."