“THIS AGREEMENT WILL BE GOOD FOR ENRON STOCK!!” (Enron’s Kyoto memo turns 24)

From MasterResource

By Robert Bradley Jr. — December 15, 2021

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

This week, a Hall of Shame business memo turned 24 years old. Dated December 12, 1997, it was written from Kyoto, Japan, by Enron lobbyist John Palmisano in the afterglow of the Kyoto Protocol agreement.

Global green planners were euphoric that, somehowsomeway, the world had embarked on an irreversible course of climate control (and thus industrial and land-use control). But Kyoto predictably failed, expired, and the Paris climate accord of 2015 teeters, with COP26 turning into a “let’s talk next year” at COP27.

Palmisano’s memo cites the benefits for first-mover ‘green’ Enron. Enron, in fact, had no less than six profit centers tied to pricing carbon dioxide (CO2)–and seven if CO2 were capped and traded.) The story of Enron as the darling company of Left environmentalists has been well told elsewhere.

The Washington Post broke the memo soon after Enron’s demise, showing how Enron was hardly a free-market, capitalistic company.  “[Enron] chairman Pushed Firm’s Agenda With Clinton White House.” Indeed, Enron was “the company most responsible for sparking off the greenhouse civil war in the hydrocarbon business” [Jeremy Leggett, The Carbon War (Penguin: 1999), p. 204.]

The Kyoto Protocol is far past its expiration date of 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: Implications of the Climate Change Agreement in Kyoto & What Transpired

This memo summarizes the implications of the agreement reached in Kyoto and also describes what I was doing and provides some observations.


If implemented, this agreement will do more to promote Enron’s business than will almost any other regulatory initiative outside of restructuring of the energy and natural gas industries in Europe and the United States. The potential to add incremental gas sales, and additional demand for renewable technology is enormous. In addition, a carbon emissions trading system will be developed. While the trading system will be implemented by 2008, I am sure that reductions will begin to trade with 1-2 years. Finally, Enron has immediate business opportunities which derive directly from this agreement.

On the policy-front: There will be a great number of country-specific and international meetings related to every aspect of this agreement. I do not think it is possible to overestimate the importance of this year in shaping every aspect of the agreement.

Three issues of specific importance to Enron are: (1) the rules governing emissions trading, (2) the rules governing joint implementation within Annex-1, and (3) the rules governing the proposed clean energy fund (which promises to dwarf the GEF as a fund for wind, solar, and power plant conversions.)

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

The endorsement of joint implementation within Annex-1 is exactly what I have been lobbying for and it seems like we won.

The clean development will be a mechanism for funding renewable projects. Again, we won. (We need to push for natural gas firing to be included among the technologies that get preferential treatment from the fund.)

The endorsement of emissions trading was another victory for us.

Highlights of the Agreement

38 developed countries are required to reduce greenhouse gas emissions to or below 1990 levels by 2012.

The U.S. reduction objective is 7%, the European Union is 8%, and Japan is 6%; therefore, it is not possible (or at least credible) that Congress can say the United States is at a comparative disadvantage vis-à-vis its main trading partners or competitors since the EU and Japan have higher control targets and are more “carbon-lean” than are we.

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 allow for emission offsets from projects in developing countries.

Joint implementation for Annex-1, developed countries and the transitional economies, is included. This means that Enron projects in Russia, Bulgaria, Romania or other eastern countries can be monetized, in part, by capturing carbon reductions for sale back in the US or other Western countries.

While I do not have the final version of the agreement, I do have the first and second versions. The latest version is not on the world-wide web.

What I Was Involved In

I gave three speeches and received an award on behalf of Enron. The speeches dealt with emissions trading, energy efficiency/renewable, and the role of business in promoting clean energy outcomes. The award came from the Climate Institute and was for 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 Environment Minister for the UK, John Gummer.

I have met Gummer and Auken several times before and it was nice for them to hear Enron praised so much. (I gave a speech with Gummer last Saturday and it was the third time we have been on the podium together. He is someone who still retains considerable influence in the UK and Europe and someone Enron might want to cultivate.)

I was also involved in a press conference.


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

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

These remarks are entirely consistent with every other signal from the Administration’s climate change team.

Through our involvement with the climate change initiatives, Enron now has excellent credentials with 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 increasingly cultivated and capitalized on (monetized).

(Parenthetically, I heard many times people refer to Enron in glowing terms. Such praise went like this: “Other companies should be like Enron, seeking out 21st century business opportunities” or “Progressive companies like Enron are….” Or “Proof of the viability of market-based energy and environmental programs is Enron’s success in power and SO2 trading.”)

Developing countries have acquired substantial negotiating power. The shift in negotiating power to India, Brazil, China, and the G-77 has been gradual and pronounced.

The EU negotiated as a group. Until two years ago, they negotiated as individual countries. While there are still individual country interests, the EU retains substantial power when working together. It was this cohesiveness that lead to a more stringent agreement.

EU delegates asked for my input into the agreement to oppose some of the positions espoused by some US delegates. In particular, the US was advocating no rules governing the trading of carbon emissions because rules would “inhibit trading.” My position is that rules defining who owns what reductions, how reductions are traded, how they are tracked, and liability rules will help promote trading since rules give both buyers and sellers more confidence in the commodity.

While some companies and trade associations continue to criticize developing countries for not doing more, no company wants to be specific on this issue. To the extent any company does, they will hide under the shield of a trade association. I think that shield will soon be pierced. I believe that some companies will soon break from the line that developing countries should do more. It is a weak position in terms of equity and suicidal in terms of their commercial interests in these countries.

An increasingly ugly trend has become evident to the environmental NGO community and the delegates from developing countries. They see the argument about developing country participation as a thinly disguised recycling of the early twentieth century fear-mongering characterized by the so-called “yellow-peril” or invasion of the US by Asian peoples.

The developing country delegates see the argument of the carbon lobby that the US will lose markets to developing countries as empty and racist—they see energy-intensive imports to the US coming from Japan and Germany in terms of automobiles (and these are high cost energy areas), while economic growth in developing countries is fueled by local growth or Western industries requiring low cost of labor, low cost for land, or permitting flexibility for new plants.

Enron should not participate in any argument like this because it hurts our credibility with developing countries, NGOs, and developed country governments.

I should have a copy of the agreement today.

The next year will be very intensive because the structure of the agreement exists, business opportunities are being defined, the rules governing emissions trading will be developed, and identifying, financing, and managing JI projects will be important.

One final point, Terry, if you remember, I predicted an agreement that would yield a 5% reduction by 2010; we got 7% by 2012. I now predict ratification within 3 years. I predict business opportunities within 18 months. I predict this agreement will have very significant influences on the energy sector within OECD and transitional economies and will accelerate renewable markets in developing countries.

This agreement will be good for Enron stock!!


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Zig Zag Wanderer
December 16, 2021 2:27 am

This agreement will be good for Enron stock!!

Yeah, so how’d that work out for you?

J P Kalishek
Reply to  Zig Zag Wanderer
December 16, 2021 2:35 am

great! They croaked and it warns everyone just how stupid that Paul Krugman guy is . . . oh, wait, you were asking them.

December 16, 2021 2:48 am

Enron failed because of Enron – not renewables, not Kyoto

Zig Zag Wanderer
Reply to  griff
December 16, 2021 2:59 am

And unreliables fail because of unreliables, not because of coal or gas.

Reply to  griff
December 16, 2021 4:30 am

Enron is a classic example of a financial bubble baby , applying derivative techniques to deregulated energy including gas and renewables.
It was followed by the so-called Lehman bubble-baby in 2008.
The Wall of Money right now is poised to blowout, what some call the everything bubble.

What is the EU going to do – they are pushing exactly the Enron deregulated spot pricing model, prices are rocketing. It was the CA political reaction to re-regulate which caused the sudden Enron collapse. Derivatives, especially forward bets on WINTER price hikes blew it out. There will be a EU political reaction – so what financial bubble-babies are going to implode? Who has placed positions on this?

Who is the NEW EU ENRON?

Reply to  bonbon
December 16, 2021 9:47 am

Of course the US Federal Reserve is actively working to manage the “risk” of climate change.

“Climate risks include the potential for banks to hold too many mortgage loans for homes in coastal areas that are threatened by rising sea levels, or loans to oil and gas drillers that could fail if energy generation switches to renewable sources.”

See Powell defends Fed’s increasing focus on climate change threats
I’m sure they’ll do just as well as Enron…

Reply to  yirgach
December 16, 2021 10:13 am

And the Pentagon Net Assessment rated Climate above terrorism. Looks like the Pentagon has Powell’s back – what could possible go wrong?

J P Kalishek
Reply to  bonbon
December 16, 2021 1:07 pm

is that above or below gender issues? That seems to be a priority to the JCS

Reply to  griff
December 16, 2021 4:39 am

So why did Griff fail?

Reply to  griff
December 16, 2021 4:45 am

Once again Griff says something that is true. 🙂

Enron was a criminal conspiracy. link

Embracing Kyoto was just another way for Enron to steal from energy consumers the same way it stole from California energy consumers. link

Kyoto or no Kyoto, Enron was doomed by its own stupidity, greed, and corruption. So, Griff is right. He just missed the part about Kyoto being part of a criminal conspiracy. And, anyone involved in Kyoto who praised Enron was a dupe IMHO.

Reply to  commieBob
December 16, 2021 5:34 am

Correct to a point – a criminal conspiracy that only functioned by energy dereg and with a Wall of Money after the LTCM bailout.

Money talks, but real money whispers….

Reply to  bonbon
December 16, 2021 6:55 am

Energy was never deregulated, that’s just another of the lies socialists tell each other.

The regulations changed, but over all there were more regulations after “deregulation” than there were before.

Reply to  MarkW
December 16, 2021 8:10 am

Rereg blew Enron’s scam into the open. Hayek’s swindle cost CA taxpayers billions. It is costing EU taxpayers billions – wait for the freeze to set in.

Reply to  bonbon
December 16, 2021 9:26 am

First you say it was dereg that created Enron, then you declare that rereg exposed Enron.
You can’t even keep your own lies straight.
As to your hatred of Hayek and the free market, that’s your problem.

Reply to  MarkW
December 16, 2021 10:17 am

Dereg opened up the Enron derivative gambit, they hit $100 billion valuation. As energy customers bellowed foul!, rereg brought the entire pack of cards suddenly crashing down. The crater left a $50 billion hole in CA’s budget. How long did Enron last?
They never expected rereg, had all kinds of funny paper riding on dereg. Not even Arthur Anderson could put humpty together again.

Reply to  bonbon
December 16, 2021 2:08 pm

So bad government regulations proves that the free market doesn’t work.
You’ve already declared that incompetent politicians proves that the free market doesn’t work.

Last edited 1 year ago by MarkW
Jeff Alberts
Reply to  bonbon
December 16, 2021 6:27 pm

Packs of cards don’t come crashing down. Houses of cards do.

Reply to  griff
December 16, 2021 5:05 am

“Enron failed because of Enron – not renewables, not Kyoto”

And we have your word for it.  

“In the climate-change debate, the companies on the ‘environmental’ side have the most to gain. First in a series called “Climate Profiteers”. 

The climate-change industry — the scientists, lawyers, consultants, lobbyists and, most importantly, the multinationals that work behind the scenes to cash in on the riches at stake — has emerged as the world’s largest industry.

This series begins with Enron, a pioneer in the climate-change industry.

Almost two decades before President Barack Obama made “cap-and-trade” for carbon dioxide emissions a household term, an obscure company called Enron — a natural-gas pipeline company that had become a big-time trader in energy commodities — had figured out how to make millions in a cap-and-trade program for sulphur dioxide emissions, thanks to changes in the U.S. government’s Clean Air Act. “


I’ve noticed a strong element of denial in your posts of late.

You should be thankful to Enron, they got the ‘transition’ ball rolling for you.

Reply to  fretslider
December 16, 2021 5:36 am

People both sides of the Climate aisle miss completely the financial sea.

David A
Reply to  bonbon
December 16, 2021 7:41 pm

“Blue Planet in Green Shackles”

Reply to  griff
December 16, 2021 7:40 am

Enron succeeded for a short time based on the lie of Kyoto and renewables. It failed because Kyoto and renewables are not viable.

Reply to  Ted
December 16, 2021 10:18 am

Of course the green stuff is shaky, but Enron failed for financial reasons (other green stuff) outlined above.

Ed Zuiderwijk
December 16, 2021 3:47 am

The Guide to the Ideal Climate Change Parasite.

Last edited 1 year ago by Ed Zuiderwijk
December 16, 2021 4:11 am

Enron was a creature of the Casino Wall of Money after the collapse of LTCM and Russia GKO bonds, and energy deregulation.
Enron President Jeffrey Skilling—the hand-picked choice of CEO Lay to replace him—bragged that Californians should be thanking Enron for “opening” the state’s power markets to competition. “We’re on the side of the angels,” he said. “We’re taking on the entrenched monopolies. In every business we’ve been in, we’re the good guys.”

Free-market ideology exposing itself . Angels – what a joke!

This model is now in full swing at the Ranch of the Crooked EU, and exactly the same energy price crisis that hit California when Skilling said that. The delayed effort to re-regulate energy collapsed Enron.

Last edited 1 year ago by bonbon
Zig Zag Wanderer
Reply to  bonbon
December 16, 2021 4:22 am

This model is now in full swing at the Ranch of the Crooked EU,

Courtesy of the Climate Change Cabal.

We’d obviously be much, much better off under communism. The EU just isn’t socialist enough!

Reply to  Zig Zag Wanderer
December 16, 2021 4:31 am

The only question is WHO IS THE NEW EU ENRON.
Enron left massive CA state deficits, cutting healthcare. When COVID hit the healthcare system went belly up.
This is a very serious financial threat. China has it’s Evergrande right now, we had Lehman and Enron, Dot-com, LTCM.

Last edited 1 year ago by bonbon
Reply to  bonbon
December 16, 2021 6:57 am

Energy was never deregulated, the regulations were drastically changed, that is all.
The only monopolies were government owned or directed.

Reply to  MarkW
December 16, 2021 8:08 am

Dereg is drastic. And Enron took on the monopolies, the angels! And went boom.
The Hayek system in full exposure.
Strange the Author neglects to mention this.

Reply to  bonbon
December 16, 2021 9:27 am

Once again, you use big words, however you haven’t a clue as to what any of them mean.
Why do you hate the free market so much? Is it because you are a loser and only tearing down those who have been successful gives any meaning to your pitiful life?

Reply to  MarkW
December 16, 2021 10:11 am

As Carney demanded $150 TRILLION to bail out the free market, it should be rated as doesn’t work, never did nor ever will. Of course it works for the 1% Davos crowd – book a ticket there now!

Reply to  bonbon
December 16, 2021 2:10 pm

Carney didn’t demand that at all.

I see you are still trying to push the notion that bad government policy proves the free market doesn’t work.

Reply to  MarkW
December 17, 2021 3:22 am

Ok, at COP26 he toned it down to a trifling $100 TRILLION.
Enron was bailed out, Lehman was bailed out, NetZero is a bailout, the Great Reset is a bailout, the Green New Deal is a bailout. Bailing out a sinking ship. Free-market requiring Government bailouts.
Much better to deep-six it, and go for Glass-Steagall telling the free-marketeers they have no tax guarantee, and massive infrastructure the world urgently needs, as BRI shows.

December 16, 2021 5:17 am

If you sow the wind you shall reap the whirlwind.

AGW is Not Science
December 16, 2021 9:55 am

A new meme should be started.

“Enron Lied.”

At least there’s some truth to that statement!

Reply to  AGW is Not Science
December 16, 2021 10:09 am

Enron lied is true.
And they weren’t even Greek!

The Dark Lord
December 16, 2021 11:59 am

lest we all forget Paul Krugman the lefts favorite “economist” was a paid cheerleader for Enron … so when he touts the BBB bill … remember he couldn’t see a scam he was intimately involved with …

Jeff Alberts
Reply to  The Dark Lord
December 16, 2021 6:34 pm

What makes you think he couldn’t see it?

Kit P
December 17, 2021 10:29 am

At the time of the California 2000/2001 I worked for Duke Energy in Washington State. Previously I had worked at a nuke plant In California, Rancho Seco, which had closed.

The cause of the rolling blackouts was inadequate generating capacity where is was needed. The problem was solved by building more generating capacity.

Every month the Duke CEO would send a letter Governor Greyout Davis warning of blackouts if permits to build plants were not issued. In April permits were issued for Moss Landing to convert it from a 1000 MWe of SSGT to 2000 MWe CCGT.

On June 6, 2000 it was a record high 106 in SF. The 2000 MWe shown on paper was still in crates. It was a drought year with 40,000 in hydro unavailable. A nuke plant had wiped main turbine bearing and was off line for an extended period. Same with a Utah coal plant that had main transformer fire. There was also a gas pipeline exploitation limiting the supply of natural gas.

A convergence of events not caused by Enron.

About 10 years before it was a similar hot day in a drought year. I was test director for a scheduled test to shut down the nuke plant from 100% power. The governor would not let us do it because it would result in blackout for a million homes. The following year the plant was closed under the urging of then SMUD GM S. David Freeman.

Duke CEO also sent letter citing the biggest pirate stealing from California rate payers based on public records. The energy czar of Davis was S. David Freeman who was pointing the finger at Texas pirates.

The biggest pirate was a California company that produced 75% of it power from out of state coal plants. Los Angles department of Water and Power.

The LADWP GM was ….. wait for it …..S. David Freeman.

A little history lesson. ENRON was a Texas natural gas pipeline company who got into trading with the deregulation of natural gas. The got into the power business by buying a Portland OR power company.

Duke Power was a regulated electric utility in NC/SC. Shortly after I joined Duke it became Duke Energy by merging with a natural gas pipeline company.

What I observed was Duke was more conservative in expanding outside of its regulated power business. Duke focused on adding value based on experience of designing, building, and operating coal and nuke plants. Based on revenue, ENRON was 10x bigger but they were equal in the profit department.

At the time of this memo, there was a volunteer program under POTUS Clinton for reporting ghg reductions. Duke was the leader based improvement at coal and nuke plants.

This was done because doing a better job is good business not because of climate concerns.

Good for rate payers, investors, and employees.

As a matter of disclosure, Duke is my largest stock in my retirement portfolio.

Robert Bradley
Reply to  Kit P
December 18, 2021 8:18 pm

Great stuff. Email me at robbradley58@gmail;.com

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