By Henry Lamb

Enron provides an example of why the concept of sustainable development must be rejected. In one decade, Enron runs the gamut: from free-marketeer, to sustainable development convert, to public/private partner, and then to inevitable disaster. The same cycle of disaster awaits the world - should the world be converted to the concept of sustainable development promoted by the United Nations.

Kenneth L. Lay received his Doctorate in economics from the University of Missouri. He worked for Houston Natural Gas, and Transco Energy Company, as well as for Exxon. He served as deputy undersecretary for energy for the U.S. Department of the Interior. He was well prepared to become Enron's CEO in 1985, and its chairman in 1986. The company whose leadership Lay assumed was not very exciting; it was an energy provider, primarily through a network of natural gas pipelines.

Global warming was becoming an issue in the late 1980s, thanks to unusually hot summers, and Senate hearings headed by then-Senator Al Gore, with considerable assistance from Senator Timothy Wirth. It was at a Gore-led hearing that NASA scientist, Jim Hansen, announced that, in his opinion, the unusually hot weather was evidence of human-caused global warming.

The United Nations began scurrying to capture the lead in saving the world from this dreaded catastrophe. Maurice Strong was named to head Earth Summit II, a World Conference to celebrate the 20^th anniversary of the first Earth Summit, which Strong also headed. Strong named preparatory committees to draft the Framework Convention on Climate Change, and the Convention on Biological Diversity, and Agenda 21, the non-binding document which codified the steps necessary to make the world "sustainable."

Businesses in the United States also began scurrying to organize a defense against the inevitable rash of new regulations from Washington and from the United Nations. Most notable among the industry groups was the Global Climate Coalition, organized in 1989. Enron was an early member - on the side of the free-marketeers.

As Strong prepared for his world conference, he realized that his global environmental agenda would require support from influential people, and a lot of money, Strong called his friend Stephen Schmidtheiny, a Swiss industrialist, and together they created the World Business Council for Sustainable Development, in the early 1990s. Ken Lay, Enron's chairman, was invited to participate.

Strong was also CEO of Canada's Hydro-Electric, a major electricity supplier that was a prime target for acquisition by several large corporations - among which was Enron.

To deal with the global warming issue, the United Nations created its Intergovernmental Panel on Climate Change (IPCC). Its First Assessment Report, published in 1990, provided the basis for the treaty negotiations underway by the preparatory committees. The massive report, issued in three volumes, was accompanied by Executive Summaries. Immediately, scientists around the world, many of whom had participated in the IPCC study, complained that the Executive Summaries had been edited by policy makers, and failed to accurately convey the conclusions reached by the panel.

Nevertheless, the Executive Summaries, which predicted catastrophic global warming, were heralded by Senators Al Gore and Timothy Wirth, and environmental organizations. President George H.W. Bush signed the Framework Convention on Climate Change and Agenda 21 at the 1992 United Nations Conference on Environment and Development in Rio de Janeiro.

The treaty created a "Conference of the Parties" (COP) to govern the treaty's implementation; and Agenda 21 called for the creation of "national councils" to implement Agenda 21 in every nation.

Senator Gore became Vice President Gore, and Timothy Wirth became Undersecretary of State for Global Affairs, and head of the delegation to the Conference of the Parties to the Climate Change Treaty. Eileen Claussen was named by Wirth to be the hands-on negotiator.

President Clinton complied with the Agenda 21 recommendation with Executive Order 12852, which created the President's Council on Sustainable Development, on June 29, 1993. Ken Lay was tapped by the administration as one of 28 members, along with Carol Browner, EPA Administrator, Timothy Wirth, Ron Brown, Secretary of Commerce, and several other Cabinet level officials. The purpose of the PCSD was to translate Agenda 21 recommendations into the public policy in the United States.

By October of 1993, the U.S. Initiative on Joint Implementation (USIJI) was formed, administered by an interagency secretariat co-chaired by the U.S. Department of Energy and the U.S. Environmental Protection Agency, with significant participation from the U.S. Agency for International Development and the U.S. Departments of Agriculture, Commerce, Interior, State, and Treasury. These are the same people who served on the PCSD.

At India's initiative, Enron signed a Memorandum of Understanding in 1992, to build a natural gas-fired electricity generating plant there. Enron's motivation was to increase markets for its natural gas. The World Bank declined the financing proposal on April 30, 1993, saying that the project was "not economically viable."

Enron's fortunes changed, however, beginning in 1993. Enron's political contributions doubled from the 1992 cycle to the 1994 cycle, and doubled again for the 1996 cycle - to $1.141 million. During this period, Enron officials accompanied U.S. officials - all members of the PCSD - on several trade junkets around the world.

In 1995, Jeff Garten, Undersecretary of Commerce for International Trade, set up an "economic war room" to push Enron's power plant in India. Ambassador to India, Frank Wisner, "constantly cajoled Indian officials," according to the Weekly Standard, and President Clinton assigned his top aide, Mike McClarty to "help with the project."

The Enron deal with India was renegotiated in 1995. Chairman of India's Central Electric Authority said that "the 1995 renegotiation of the Enron deal was a piece of professional dishonesty on the part of MSEB [Indian Officials] engineers who may have succumbed to political pressure...," according to a report in Asia Times. The paper also reports that "Enron paid $20 million as "educational gifts". Critics consider these payments to be bribes to clear the project."

The project was split into two phases. The final phase was solidified on May 6, 1999, when Enron announced successfully securing a funding package amounting to $1.87 billion, consisting of loans and guarantees from 10 different banks and financial institutions, including $400 million from U.S. institutions.

The Dabhol Power Corporation in India was only one of dozens of "joint implementation" projects which Enron was developing around the world. For example, Enron created a chain of subsidiary corporations in Mauritius, a tax haven, to construct and operate ships for transporting liquid natural gas (LNG), and a terminal for offloading.

Six days after Enron contributed $100,000 to the Democratic National Committee in July, 1995, Enron executives were on a trade mission to Bosnia with Secretary of Commerce, Mickey Kantor, where Enron later signed a contract to build a $100 million power plant. In 1996, Enron joined with Amoco to build a $100 million solar power plant in India, and another in Nevada, and another in Greece.

In 1997, Enron acquired the Zond Corporation, the nation's largest wind generating company.

Throughout the Clinton years, Enron positioned itself to profit from the coming regulation of fossil fuel. By expanding its investment in alternative energy sources, Enron expected to profit handsomely from the much-touted and eagerly anticipated "emissions trading program" being negotiated in the Kyoto Protocol.

Enron followed BP, Shell, and Amoco, and resigned from the Global Climate Coalition.

The first meeting of the Conference of the Parties to the Climate Change Treaty took place in Berlin in 1995. The first, and only significant order of business was to convert the "voluntary" treaty to a legally binding treaty. Thus, the "Berlin Mandate," which called for a legally binding Protocol to be adopted at the third meeting of the COP in Kyoto, Japan in 1997.

Conveniently, the IPCC issued its Second Assessment Report just months before the second meeting of the COP, in Geneva in 1996. Again, the massive report of the scientists was presented with a staff-prepared Executive Summary. Again, scientists around the world complained that the report had been severely edited and failed to convey accurately the findings of the scientists. Again, their complaints were ignored by the U.N., and the scientists who complained were systematically ridiculed and discredited.

The IPCC Executive Summary concluded that: (1) global warming was occurring (with predictions of future warming reduced dramatically from the First Assessment Report; (2) that the warming was "influenced" by human activity (the burning of fossil fuel); (3) that current commitments were inadequate; and (4) that new measures should be taken as a matter of public policy.

The Liepzig Declaration was adopted by more than 100 of the world's leading climatologists, which challenged the scientific conclusions of the IPCC, but it was ignored by the United Nations, and by the press.

By 1996, there were scores of "joint implementation" projects, similar to Enron's, in the works by dozens of the largest international corporations. Carol Browner, Timothy Wirth, and Eileen Claussen, and other U.S. officials met systematically with major businesses in the U.S., encouraging them to "get on-board early" to reap the greatest benefits. The EPA promised that the Clinton administration would regulate carbon dioxide emission, whether or not the Kyoto Protocol included the provision. And that "early participation" would earn "credits" for cooperating businesses when the plan finally went into force.

At the international level, Maurice Strong's International Business Council on Sustainable Development applied the same kind of pressure to multinational corporations. Promises of financial assistance for "joint implementation" projects, and threats of disapproved projects were the main tools of persuasion. This is called "economic incentives and disincentives" in U.N.-speak.

A petition was circulated among the world's scientists by Dr. Frederick Seitz, past president of the National Academy of Science. More than 18,0000 scientists signed the document which said there was not sufficient scientific evidence of human-caused global warming to justify policy action. The scientists, and the project were ignored by the U.N.

The IPCC and the U.N. Framework Convention on Climate Change Secretariat, both declared that the science of global warming was settled; that there would be no further debate on the subject. Although the scientific evidence continued to mount, that the conclusions reached by the IPCC were wrong, no new evidence was considered in the climate change negotiations.

From the U.N.'s perspective, the transfer of technology, and transfer of development and jobs to developing nations, was at least as, if not more, important than curtailing carbon dioxide emissions. From Enron's perspective, and that of the other major corporations who jumped on board the climate-change express, both investment, and future profits would be jeopardized if scientific evidence were allowed to demonstrate that burning fossil fuel did not affect climate change, and therefore, its regulation was unnecessary.

Just before the 1997 Kyoto conference, Timothy Wirth left the government, to administer the $1 billion grant which Ted Turner gave to the United Nations. Eileen Claussen resigned shortly thereafter to head the Pew Center on Global Climate Change, in which Enron was a member and strong supporter. (Note: Since Enron's collapse, most references to the firm have been removed from the Pew website, even their membership listing). This multi-million dollar non-government organization was created for the purpose of promoting the global warming industry by recruiting industry to join Enron and the other "early-birds" working on government-favored "joint implementation" projects.

At COP 3, in Kyoto, Ken Lay received much attention and an award from the Climate Institute for his leadership in moving industry toward alternative energy. Al Gore was a recipient in a previous year. At the last possible moment, the Kyoto Protocol was adopted, but without the details necessary for implementation. There could be no emissions trading program until the Protocol was ratified and in force.

Congress also prevented the EPA from including carbon dioxide in a "multiple pollutant" regulatory package proposed by the agency. Still, Enron continued its investments and business expansion, which included a growing interest in trading financial instruments. Enron's stock value, revenue, and assets soared - as did the company's debt.

The entire empire was predicated upon a global shift away from fossil fuel to alternative energy, and a global emissions trading regime was the device to be used to effect the transition. Ken Lay had positioned Enron to take full advantage of the new world.

When George Bush announced that he would not seek a "multiple pollutant" regulatory policy, which had been urged by Enron, and when George Bush announced that he would withdraw from the Kyoto Protocol, Enron realized that the $113,800 they had invested in the Bush campaign, was wasted.

The sweet deal Enron had negotiated with India for the Dabhol Power Corporation began to sour. EPA regulations on carbon dioxide emission from coal-fired power plants forced many plants to switch to natural gas. The increasing demand and declining supply, forced the price of natural gas to skyrocket. The Dabhol Power Corporation could not pay its gas bill to Enron, which amounted to nearly $240 million in December, when Enron announced its bankruptcy filing.

While on-going investigations of Enron will reveal bad business decisions, perhaps wrong-doing and corruption, Enron's experience can be seen as one of the consequences of public/private partnerships that seek to use the power of government to enhance profits, or to use corporate power to advance a governmental agenda - which is the essence of sustainable development.

Sustainable development, as it is being promoted by the United Nations, requires global management of economic development to ensure environmental protection while providing social equity.

Enron is a classic example of why this policy will not work, and just how miserably it can fail.

Other companies that have abandoned the uncertainty of free-market competition to enter into public/private partnerships with the great governmental powers, might well re-examine their business plan, re-think their strategy, and remember what Grandpa said to do, when anyone came calling and announced: "I'm from the government; I'm here to help you."