From: lisa.jacobson@enron.com
To: michael.terraso@enron.com, jeffrey.keeler@enron.com
Cc: steven.kean@enron.com, linda.robertson@enron.com, richard.shapiro@enron.com, catherine.mckalip-thompson@enron.com
Date: 2001-04-30 10:47:00+00:00
Subject: Voluntary Approaches to Climate Change - Action in Congress & the
 Administration

To: Mike Terraso
 Jeff Keeler

Cc: Steve Kean
Linda Robertson
Rick Shapiro
 Catherine McKalip-Thompson

From:   Lisa Jacobson

Re: Voluntary Approaches to Climate Change - Action in Congress & the 
Administration

Date:   April 30, 2001

In the current debate over how the U.S. should approach domestic and 
international climate change issues, focus has increased lately on exploring 
&voluntary8 approaches to reduce greenhouse gases.  President Bush,s 
statements that the U.S. would not impose mandatory CO2 reductions on power 
plants as part of a multipollutant bill and his position that the U.S. should 
not move forward with work on the Kyoto Protocol (which contains actual 
commitments on emission reductions) have driven the discussion about 
voluntary programs and whether such programs can achieve significant results.

Two articles (attached) appeared in the Washington Post over the weekend.  
The first, reported on an interview with Senate Minority Leader Tom Daschle 
(D-S.D.) where he said that he and other Democrats would be open to new 
approaches to address climate change, including voluntary compliance with 
greenhouse gas emission reduction goals.  In response to strong criticism by 
environmentalists, a second article appeared on Sunday that backs away from 
those remarks and re-states his support for &binding measures8 to reduce 
greenhouse gas emissions.   

Both the Bush Administration and leaders on Capitol Hill are seeking Enron,s 
input on the structure and potential effectiveness of voluntary programs.   
As the Administration,s Climate Change Task Force is preparing its 
recommendations for a new U.S. proposal, our input is needed in the next few 
weeks.
Experience with Voluntary Approaches - Back to the Future?
The U.S. and other developed nations have acknowledged that significantly 
reducing greenhouse gas emissions will be extremely difficult through 
voluntary measures alone.  It is not yet known whether the Bush 
Administration will propose a climate change plan that will result in lower 
atmospheric concentrations of greenhouse gases.  However, it is unlikely that 
a U.S. proposal that calls for only voluntary measures will carry any 
credibility in the international debate.  
Clearly, industry opponents to carbon regulation do not seek a strong 
program, but as recent weeks suggest, Administration officials have differing 
views on objectives and approaches.    Below are some recent examples of why 
voluntary plans in the past have not provided the desired results:
1) Under the Framework Convention on Climate Change, signed by former 
President Bush and subsequently ratified by the U.S. Senate, developed 
countries voluntarily agreed to return their greenhouse gas emissions to 1990 
levels by the year 2000.  By 1995, industrialized countries acknowledged that 
they were not on track to meet the voluntary goal, and initiated negotiations 
to adopt binding and quantifiable emissions reduction commitments.  These 
negotiations resulted in the Kyoto Protocol,s targets and timetables, where 
industrialized nations committed to reduce their aggregate emissions to about 
5 percent below 1990 levels between 2008 and 2012 and the U.S. agreed to a 
reduction of 7 percent below 1990 levels between 2008 and 2012. 

2) On the domestic level, the 1992 Energy Policy Act directed DOE to develop 
a voluntary reporting program to collect information on activities to reduce 
greenhouse gas emissions.  The aim of the &1605b8 program is to encourage 
voluntary emissions reductions.  While some companies participate in the 
program, it has not yielded significant emissions reductions.  Companies 
participate mostly to receive positive pubic relations benefits and to gain 
experience with inventories, reporting and verification.  Many hope to be 
rewarded with credits for their voluntary action under a potential mandatory 
program.  To encourage participation, 1605b provides wide flexibility on 
setting a baseline.  It also allows for dual reporting of emissions 
reductions, self-certification of reductions and permits the entity to decide 
the level of reporting it undertakes.

A 1998 GAO study said that EIA and other organizations agreed that many of 
the reductions reported under the voluntary reporting program would not 
qualify as &real, appropriately reviewed and verified8 emissions reductions.  
Congress has been considering how to strengthen the 1605b program for several 
years and will likely include provisions to do so in new climate change plans.

3) Chafee/Lieberman &Credit for Early Action8 legislation:  In the 106th 
Congress, the debate centered around proposals to help U.S. businesses 
achieve &credit8 for voluntary actions to reduce greenhouse gases.  The 
legislation never progressed, however, due to the difficulty in structuring a 
voluntary program.  Concerns about granting credit against not-yet-created 
regulatory regimes, difficulty with setting baselines for determining which 
voluntary actions warrant credit, and political problems with links to 
international commitments all added to the bill,s demise. 

Opportunities for Enron

Through our ongoing advocacy on domestic multipollutant strategies and our 
role as a respected source for information on how to structure market-based 
systems for emissions reductions, Enron is well situated to provide 
high-level input to the Administration and Congress toward developing 
credible energy and climate change proposals.  In particular, we have a real 
opportunity to promote ideas that benefit Enron businesses - new generation, 
gas, energy efficiency, emissions trading and risk management - while handing 
the White House some ways to restore its credibility on climate issues.

Enron,s input should continue to focus on mechanisms that will result in real 
reductions of greenhouse gas emissions, while providing full flexibility for 
companies and others to meet clear goals.  We have already indicated to the 
Administration and others in initial discussions that voluntary measures 
could fit into a comprehensive package, but will likely fall short of 
environmental and international expectations.  

The Senate will be conducting several hearings in the coming weeks, and the 
White House,s Task Force will continue to meet and prepare its climate change 
proposal.  Jeff and I will develop specific recommendations for the White 
House and Congress and circulate them with you and relevant Enron commercial 
groups.  We will also incorporate discussion of these issues in an Enron-wide 
strategy meeting on emissions issues we are planning in May.

Please do not hesitate to contact me if you have any questions.


Lisa Jacobson
Enron
Manager, Environmental Strategies
1775 Eye Street, NW
Suite 800
Washington, DC 20006

Phone: +(202) 466-9176
Fax: +(202) 331-4717