Editor Note: The important role of defunct Enron Corp on climate issues has been well documented at MasterResource. This post by Bruce Stram, who served as Enron’s chief economist for most of his 20 years at the corporation, adds to the historical record. [Part II tomorrow will describe Enron’s revisionist view of the natural gas resource base that was related to promoting gas as a “bridge fuel” to “sustainability.”]

Several papers I had written made me Enron’s environmental policy lead by 1992. I was blessed with a CEO/Chairman Ken Lay who understood that a carbon tax or cap and trade was good for natural gas relative to other fossil fuels, and we were of course a natural gas company.

We had developed a theme about the environmental goodness of natural gas. But I told Ken we really had no interaction with the various environmental NGO’s. So with Ken’s approval, I made a trip to Washington, DC, and New York City to visit a range of these and see what common ground we could find.

They, in fact, were eager to talk, heard my story, and understood it. They said they loved natural gas, but they were focused on the upcoming Rio de Janeiro conference on global warming (Earth Summit). They were very concerned that the the Bush (41) Administration wasn’t going to attend.

I came back to Enron and told Ken that there were four things that were important to environmentalists, and they had two hands and two feet to help them remember: Rio, Rio, Rio, and Rio.

I then had a young man working for me who had been in the Bush White House. Ken took him as a guide and buttonholed folks in the White House with the result that the Bush administration was represented at the meeting where he signed the Framework Convention on Climate Change Treaty. [Ed: Ken Lay’s letter to Bush in this regard in reprinted in Appendix A below.]

Part II will explain Enron’s thinking that natural gas was plentiful to be a “bridge fuel” to a sustainable future. At the time (the early 1990s), there was still a lot of belief that natural gas was depleting alongside “Peak Oil.”

If Enron had not changed the way natural gas resources were thought about (the subject of Part II tomorrow), natural gas as a transition energy source would not have had nearly as much currency with the environmental NGOs. I evidently agree, as shown in Appendix B below.

Appendix A: Lay Letter to George H.W. Bush

In April 1992, a few months ahead of the scheduled Earth Summit in Rio de Janeiro, Enron’s chairman wrote a three-page, carefully orchestrated

letter to George H. W. Bush. Here are some key excepts (which was cc’d to two pro-Summit Bush advisors Clayton Yeutter and C. Boyden Gray):

Dear Mr. President: I am writing to urge you to attend the upcoming United Nations Conference on Environment and Development scheduled for early June in Brazil and to support the concept of establishing a reasonable, non-binding, stabilization level of carbon dioxide and other greenhouse gas emissions. This stabilization level should serve as a useful public policy guide, not a policy mandate. Moreover, I believe a market-based policy approach is the most cost effective and environmentally beneficial method to achieve greenhouse gas stabilization. The demagoguery on both sides of this issue has been extraordinarily fierce. Frankly, I do not believe the oceans will boil in a few years if we don’t address greenhouse gas emissions, but I also do not believe the U.S. will suffer from economic ruin if prudent steps are taken to reduce CO2 emissions in order to protect the global environment. In fact, if pursued through market-based policies, a reduction in greenhouse gases should result in a cleaner environment, cheaper electricity, and more American jobs. Among other industries, I am convinced that America’s hard-pressed domestic natural gas industry would benefit substantially from a market-based approach to reducing CO2 emissions. Natural gas is our cleanest fossil fuel and through its increased use in electric power generation could play a major role in reducing CO2 emissions and delivering lower electricity prices to consumers…. In summary, I urge you to provide leadership on this important global environmental issue. Not only will many U.S. industries benefit from measures to reduce greenhouse gas emissions, including the natural gas industry, but with the appropriate market-based policies, the measures will result in a cleaner environment, cheaper electricity, more American jobs, and a reduced trade deficit. Sincerely, Ken

Appendix B

“[Enron was] the company most responsible for sparking off the greenhouse civil war in the hydrocarbon business.”

Jeremy Leggett. The Carbon War. London: Penguin Books, 1999, p. 204.

“Numerous mainstream energy companies, including British Petroleum (BP, in solar energy), Enron (solar energy and windpower), and General Electric (fuel cells and micro turbines), are investing in [new energy] technologies.”

Christopher Flavin and Seth Dunn, “Reinventing the Energy System.” In Worldwatch Institute, State of the World 1999 (New York: W. W. Norton, 1999), p. 32.

“As the energy revolution gains momentum, some of the largest gas and oil companies are beginning to support it. Enron, originally a large Texas-based natural gas company, has made a strong move in the renewables field with its acquisition of Zond, the largest wind power company in the United States, and its investment in Solarex, the second largest U. S. manufacturer of photovoltaic cells.”