Senator John Heinz R–PA and Timothy Wirth D-CO had previously cosponsored a “Project 88” to provide a pathway for converting environmental issues into business opportunities. That media-fueled alarm about acid rain provided a great basis for new “allowance trading” legislation to create markets for buying and selling excess sulfur dioxide SO2 credits. Project 88 became the Clean Air Act of 1990.One of the big traders in the SO2 allowance market was Enron. Back at that time in the 1990s the company was diversifying its energy business, and already owned the largest natural gas pipeline that existed outside of Russia, a colossal interstate network. However natural was having difficulties competing with coal.
The hype about global warming which had been ginned up by then-Senator Al Gore’s famous 1988 congressional hearings on the matter provided what Enron recognized as a dream opportunity. After all, since a cap-and-trade market had been established for SO2, why not do the same for CO2 which was already being blamed for a climate crisis? Natural gas was a lower CO2-emitter than coal. Besides, they knew exactly where to go in Washington to get some help.
Enron’s CEO Ken Lay had met with President Clinton and Vice President Gore in the White House on August 4, 1997 to prepare a strategy for the upcoming Kyoto conference in December. Kyoto was the first step toward creating a carbon market that Enron desperately wanted Congress to support.
But there was one very pesky problem. Unlike SO2 which really does produce unhealthy smog, CO2 wasn’t a pollutant…at least not yet…and therefore EPA had no authority to regulate it. So after Al Gore’s Senate pal Timothy Wirth was appointed to become undersecretary of state for global affairs in the Clinton-Gore administration, Enron’s boss Lay began working closely with him to lobby Congress to grant EPA necessary CO2 regulatory authority plus also gain public support for the U.N.’s Kyoto Protocol initiative.