WASHINGTON -- Enron Corp. has been widely depicted as a free market swashbuckler leveraging its political power for deregulation. In truth, the Texas energy giant and its well-connected chief, Dr. Kenneth Lay, also constituted the most active corporate advocate of the Kyoto global warming treaty. Lay's efforts last year reached into the Bush Cabinet to Treasury Secretary Paul O'Neill.
There is no evidence of direct communication on this issue between Lay and O'Neill. The middleman between them was former Sen. Timothy Wirth, an environmentalist who is now president of Ted Turner's billion-dollar United Nations Foundation. Lay tried hard to harness O'Neill's indiscreet enthusiasm for the global warming cause to a commercial bonanza for Enron. An O'Neill spokesman told me that he had no knowledge of Lay's support for the Kyoto treaty and reaffirmed his own opposition to it.
Lay has been painted as a heartless advocate of free market economics when he actually was working behind the scenes for control of energy emissions, establishing alliances with the most radical environmentalist pressure groups. Just as Enron pushed electrical deregulation to make billions in energy trades, Lay wanted restrictions on carbon dioxide emissions under the Kyoto agreement to artificially create a market for CO2 "credits" to be purchased to burn coal. Enron was not about ideology and certainly not partisanship, but was using governmental contacts to maximize profits.
Lay had secretly cultivated Clinton administration officials -- including Tim Wirth, under secretary of state for Global Affairs. Lay was trying to use Wirth as a conduit to Alcoa CEO (and environmentist) Paul O'Neill. On Oct. 26, 2000, Wirth suggested to O'Neill that it was necessary to divest global warming of its political coloration. In essence, Wirth wanted to strip the dead weight of potential presidential loser Al Gore from the issue. On Nov. 7, election day, O'Neill let Wirth know that he essentially agreed with his analysis.
By Jan. 17, the election was decided, and O'Neill was the unexpected nominee for the Treasury portfolio. Wirth, now at the UN Foundation, told Lay that "Paul" was willing to help in fighting global emissions. Mary Hope Katsouros, senior vice president of the environmentalist Heinz Center, on Feb. 16 issued a private report about O'Neill's help, which was directed to Lay at Enron. She reported that the new Treasury Secretary had passed to colleagues at a Cabinet meeting his own article about global warming. At a private dinner, she reported, O'Neill promised to help fight greenhouse emissions.
Adverse Republican reaction to O'Neill's position curtailed his advocacy, and Lay's attention was directed elsewhere as Enron's house of cards began to disintegrate. Nevertheless, the attempt was audacious: to enlist the conservative administration in a scheme to enrich the rapacious corporation at the expense of ordinary American energy users, thanks to the Kyoto treaty's restrictions.
Ratifying and implementing Kyoto would greatly increase the cost of generating electricity from coal. To burn coal, it would be necessary to purchase credits for the emission of CO2. That would create a market for Enron, buying and selling emission credits. Internal memos show that Enron envisioned a profit here as early as 1996.
While Lay was becoming one of George W. Bush's major contributors, he was building the company's alliances in the green movement. On Dec. 12, 1997, an internal Enron memo claimed that the company had "excellent credentials with many 'green' interests" -- including the extremist Greenpeace. These groups, in turn, were described as referring to Enron "in glowing terms."
The Dec. 12 document asserted that the Kyoto treaty "will do more to promote Enron's business" than any other regulatory initiative. It called the treaty's authority to trade in CO2 credits "another victory for us," adding: "This agreement will be good for Enron stock!!" Enron's advocacy began years earlier. On Dec. 5, 1995, Lay wrote Environmental Protection Administrator Carol Browner pressing for the trading of emission standards.
Paul O'Neill can be accused of being a misguided idealist about global warming, but Ken Lay saw Kyoto's green as the color of money. While it flourished, Enron knew no loyalty to party, to ideology or to American consumers. It had contempt for more than its employees.