The Money and Connections Behind Al Gore’s Carbon Crusade
by Deborah Corey Barnes
Al
Gore’s campaign against global warming is shifting into high gear.
Reporters and commentators follow his every move and bombard the public
with notice of his activities and opinions. But while the mainstream
media promote his ideas about the state of planet Earth, they are mostly
silent about the dramatic impact his economic proposals would have on
America. And journalists routinely ignore evidence that he may
personally benefit from his programs. Would the romance fizzle if Gore’s
followers realized how much their man stands to gain?
Earlier
this year Gore experienced a notable public relations debacle. The
Tennessee Center for Policy Research, a state think tank, revealed that
he was an energy hog. Public records show that Gore’s Nashville mansion
used in one month more than twice the electricity the typical American
household uses in a year: His average monthly electric bill was more
than $1,359. Moreover, Gore’s household energy use increased after An
Inconvenient Truth, his film about global warming, was released to
ecstatic reviews.
Never mind that the scientific community is
divided over what causes global warming, how bad it is and how to deal
with it. Gore plays Chicken Little to the media’s applause, insisting
that the world is warming dangerously and that he has the solution.
Continued
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The ‘Cap-and-Trade’ System
To
resolve the “climate crisis,” Gore wants to put a cap on the production
of greenhouse gases. He calls for an immediate freeze on U.S.
emissions, a ban on new coal-fired power plants, tough new fuel-economy
and energy-efficiency standards, renewable energy mandates, carbon taxes
and mandatory targets and timetables for reducing greenhouse-gas
emissions. Those emissions consist mostly of carbon dioxide (CO2), the
byproduct of fossil fuels such as oil, coal and natural gas, which
supply 85% of all U.S. energy. Gore’s blueprint to save the planet moves
the United States towards a command economy in which government
regulators hold sway over what kinds and amounts of energy will be made
available to the private sector. His principal regulatory tool is what’s
called carbon-credit trading.
Under a so-called “cap-and-trade”
system, government places a ceiling or “cap” on private-sector emissions
of CO2 and other “greenhouse gases.” Each sector, industry or business
is allocated a fixed quantity of carbon credits that allow it to emit
specific quantities of greenhouse gases. As an example, one tradable
carbon credit might permit the emission of one ton of CO2. If a business
emits more tons of CO2 than its supply of credits allows, it has the
option to buy surplus credits from other firms -- or it will have to pay
a fine in proportion to the amount of the excess emission. By contrast,
businesses that emit less than their allocation can sell their excess
credits.
This system, which may sound market-friendly, is
something only a bureaucrat could dream up. The twist is that the carbon
market exists only because the government’s imposition of a cap creates
an artificial scarcity in the right to produce energy. In a
cap-and-trade system, buyers will purchase their offsets from a broker
or through an electronic trading platform. In Europe, carbon trading is
already a reality. Since 2005, carbon offsets have been traded
electronically on the European Climate Exchange (ECX).
Most
carbon cap-and-trade programs also allow regulated entities to earn
credits by taking actions that supposedly reduce emissions outside of
the firm’s facilities or operations. In one popular version of the
carbon-offset concept, firms earn credits by buying seedling trees for
planting in less-developed countries. Supporters claim the CO2 intake of
the trees will balance out the carbon emissions of the sponsoring
firm’s industrial activity. Despite its public relations value,
scientists scoff at the notion that it’s possible to plant enough trees
to balance out man’s production of CO2. But carbon-offset projects are
popular in the environmentalist community.
More Chances to Cheat
However,
the most radical environmentalists reject cap-and-trade. They say it
allows polluters to continue to pollute by purchasing carbon credits.
That is true but irrelevant. A ton of CO2 emitted in Beijing has the
same climatologic effect as a ton emitted in New York. The real problem
is that every country’s government has an incentive to cheat on behalf
of its domestic producers. This has been the European Union’s (EU)
experience with the Emissions Trading System (ETS) that the EU
established to implement the Kyoto Protocol. In just about every EU
country except Britain, the credits allowed exceed the corresponding
tons of emissions.
Carbon offsets provide even more opportunities
to cheat. For example, some aluminum companies claim they deserve
credits just because they recycle aluminum for a living -- recycling
being less energy intensive and thus generally cheaper than making the
stuff from scratch. The most popular activity for generating offsets is
planting trees. But this method of storing carbon takes years and the
long-term results are uncertain. If the trees die and decay, or are
burned to clear land for agriculture, there is no net emission
reduction. The net carbon reduction from tree planting may not
materialize for decades, but the offsets are given out now.
To
critics on both the free-market right and the environmentalist left,
carbon offsets are no more than a marketing gimmick. Some describe the
fanciful device as akin to medieval indulgences that were sold in a
cleric-run market to regulate the remission of sin.
The truth is
that almost every productive human action requires the use of natural
resources, and nothing is pollution free. Even something like wind power
requires windmills, which, according to environmentalists such as
Robert F. Kennedy, Jr., may visually “pollute” the natural landscape.
Kennedy, head of the green group Riverkeepers, says he supports wind
power -- except when the windmills are in the waters off Cape Cod.
Whatever
its impact on the environment, the cap-and-trade carbon scheme is sure
to boost the economic and political prospects of people and groups that
are behind it. Before the company collapsed under the weight of
financial scandal, Enron under CEO Ken Lay was a key proponent of the
cap-and-trade idea. So was BP’s Lord John Browne, before he resigned
last May under a cloud of personal scandal. In August 1997, Lay and
Browne met with President Bill Clinton and Vice President Gore in the
Oval Office to develop administration positions for the Kyoto
negotiations that resulted in an international treaty to regulate
greenhouse gas emissions.
The U.S. Senate voted 95 to 0 not to ratify the Kyoto treaty in 1997. But that hasn’t stopped Al Gore.
Gore’s Circle of Business
Al
Gore is chairman and founder of a private equity firm called Generation
Investment Management (GIM). According to Gore, the London-based firm
invests money from institutions and wealthy investors in companies that
are going green. “Generation Investment Management, purchases -- but
isn’t a provider of -- carbon dioxide offsets,” said spokesman Richard
Campbell in a March 7 report by CNSNews.
GIM appears to have
considerable influence over the major carbon-credit trading firms that
currently exist: the Chicago Climate Exchange (CCX) in the U.S. and the
Carbon Neutral Company (CNC) in Great Britain. CCX is the only firm in
the U.S. that claims to trade carbon credits.
CCX owes its
existence in part to the Joyce Foundation, the Chicago-based liberal
foundation that provided $347,000 in grant support in 2000 for a
preliminary study to test the viability of a market in carbon credits.
On the CCX board of directors is the ubiquitous Maurice Strong, a
Canadian industrialist and diplomat who, since the 1970s, has helped
create an international policy agenda for the environmentalist movement.
Strong has described himself as “a socialist in ideology, a capitalist
in methodology.” His former job titles include “senior advisor” to UN
Secretary General Kofi Annan, “senior advisor” to World Bank President
James Wolfensohn and board member of the United Nations Foundation, a
creation of Ted Turner. The 78-year-old Strong is very close to Gore.
CCX
has about 80 members that are self-confessed emitters of greenhouse
gases. They have voluntarily committed themselves to reduce their
emissions by the year 2010 to a level 6% below their emissions in 2000.
CCX members include Ford Motor Company, Amtrak, DuPont, Dow Corning,
American Electric Power, International Paper, Motorola, Waste Management
and a smattering of other companies, along with the states of Illinois
and New Mexico, seven cities and a number of universities. Presumably
the members “purchase” carbon offsets on the CCX trading exchange. This
means they make contributions to or investments in groups or firms that
provide forms of “alternative,” “renewable” and “clean” energy.
CCX
also has “participant members” that develop the carbon-offset projects.
They have names like Carbon Farmers and Eco-Nomics Incorporated. Still,
other participant member groups facilitate, finance and market
carbon-offset projects to “sequester, destroy or displace” greenhouse
gases. CCX aspires to be the New York Stock Exchange of carbon-emissions
trading.
Along with Gore, the co-founder of GIM is Treasury
Secretary and former Goldman Sachs CEO Hank Paulson. Last September,
Goldman Sachs bought 10% of CCX shares for $23 million. CCX owns half
the ECX, so Goldman Sachs has a stake there as well.
GIM’s
“founding partners” are studded with officials from Goldman Sachs. They
include David Blood, former CEO of Goldman Sachs Asset Management
(GSAM); Mark Ferguson, former co-head of GSAM pan-European research; and
Peter Harris, who headed GSAM international operations. Another
founding partner is Peter Knight, who is the designated president of
GIM. He was Sen. Al Gore’s chief of staff from 1977-1989 and the
campaign manager of the 1996 Clinton-Gore re-election campaign.
Like
CCX, the ECX has about 80 member companies, including Barclays, BP,
Calyon, Endesa, Fortis, Goldman Sachs, Morgan Stanley and Shell, and ECX
has contracted with the European Union to further develop a futures
market in carbon trading. What’s in it for the companies? They will
benefit either by investing in carbon credits or by receiving subsidies
for doing so.
Front and Center
Clearly, GIM is poised to
cash in on carbon trading. The membership of CCX is currently voluntary.
But if the day ever comes when federal government regulations require
greenhouse-gas emitters -- and that’s almost everyone -- to participate
in cap-and-trade, then those who have created a market for the exchange
of carbon credits are in a position to control the outcomes. And that
moves Al Gore front and center. As a politician, Gore is all for
transparency. But as GIM chairman, Gore has not been forthcoming,
according to Forbes magazine. Little is known about his firm’s finances,
where it gets funding and what projects it supports.
We do know
that Goldman Sachs has commissioned the World Resources Institute
(affiliated with CCX), Resources for the Future, and the Woods Hole
Research Center to research policy options for U.S. regulation of
greenhouse gases. In 2006, Goldman Sachs provided research grants in
this area totaling $2.3 million. The firm also has committed $1 billion
to carbon-assets projects, a fancy term for projects that generate
energy from sources other than oil and gas. In October 2006, Morgan
Stanley committed to invest $3 billion in carbon-assets projects.
Citigroup entered the emissions-trading market in May, and Bank of
America got in on the action in June.
Some environmentalist
groups disparage Gore and his investment banker friends. They say the
Gore group caters to others who share their financial interest in the
carbon-exchange concept. The bulletin of the World Rainforest Movement
says that members of a United Nations-sponsored group called the
Intergovernmental Panel on Climate Change (IPCC) stand to gain by
approving Gore’s carbon-trading enterprise. The IPCC has devised what it
says is a scientific measure of the impact of greenhouse gases on
global warming. In fact, the critics charge, the IPCC sanctions a
mechanism that mainly promotes the sham concept of carbon exchange.
The
global non-profit organization Winrock International is an example of
one IPCC panel member that seeks out groups and individuals with an
interest in carbon trading. Arkansas-based Winrock provides worldwide
“carbon-advisory services.” Winrock has received government grants from
the EPA, USAID and the Departments of Labor, State and Commerce, as well
as from the Nature Conservancy (whose chairman used to be Henry
Paulson). Winrock argues that cap-and-trade carbon trading is the best
way to prevent a climate change crisis. But consider this: When a
non-profit group takes money from oil companies and advocates drilling
for oil as a solution to energy shortages, it is certain to be attacked
as a tool of Big Oil. So far, the groups linked to Al Gore have avoided
similar scrutiny.
Then there’s the World Resources Institute
(WRI). It was the first nongovernmental group to join CCX as an
associate member (a designation for virtuous groups whose greenhouse-gas
emissions are negligible). Many of its donors are CCX members or
otherwise support carbon exchanges, including the Shell Foundation,
Whole Foods Market, the Nature Conservancy, American Forest and Paper
Association, and the Pew Center for Climate Change, as well as the
Rockefeller Brothers Fund and the Ford Foundation.
Connect the Dots
In
June 2006, the World Bank announced that it, too, had joined CCX,
saying that it intended to offset its greenhouse gas emissions by
purchasing emission credits through CCX. The bank says its credits would
contribute to restoring 4,600 hectares of degraded pastureland in Costa
Rica. Somehow, CCX has figured out that this is an amount equivalent to
22,000 metric tons of emission that the bank calculates are created by
its activities.
A World Bank blog called the Private Sector
Development Blog regularly features items touting Al Gore and the
concept of carbon credits. Its articles typically announce corporate
“green” initiatives in which carbon credits are said to cancel out “bad”
CO2 emissions released by a company’s activities.
In fact, the
World Bank now operates a Carbon Finance Unit that conducts research on
how to develop and trade carbon credits. The bank works with Italy, the
Netherlands, Denmark and Spain to set up carbon-credit funds in each
country to purchase emission credits from firms for use in developing
countries. In addition, it runs the Carbon Fund for Europe helping
countries meet their Kyoto Protocol requirements. These funds are traded
on the ECX (half of which is owned by CCX, itself a creature of Al
Gore’s firm, Generation Investment Management). Can we connect the dots?
A
website affiliated with An Inconvenient Truth invites concerned
citizens to personally fight global warming by offsetting their “carbon
footprint.” The ways to do that include changing over to fluorescent
light bulbs and turning down your thermostat at home. But the website
also urges Americans to offset their personal CO2 emissions by “buying”
carbon offsets from a native-American-owned company called Native
Energy. Native Energy promotes “renewable” wind energy by buying and
selling carbon-emission credits and futures for wind turbine projects on
Indian reservations.
What the website doesn’t mention is that
that the founder of Native Energy, energy industry veteran Tom Boucher,
also founded a marketing company called Green Mountain Energy, a CCX
associate partner that describes itself as “the nation’s leading retail
provider of cleaner energy and carbon-offset solutions. Green Mountain
offers residential, business, institutional and governmental customers
an easy way to purchase cleaner, affordable electricity products, as
well as the opportunity to offset their carbon footprint.” In other
words, Green Mountain sells advisory services to energy users, alerting
them to opportunities to contribute to or invest in groups like Native
Energy.
So it seems banks and investment houses are going green,
eager to enter an emerging emissions market. Meanwhile,
environmentalists are discovering new ways to get rich while believing
they are saving polar bears and rainforests.
Gore’s Non-profit Agitators
In
2006 Al Gore established his own global-warming non-profit group, the
Alliance for Climate Protection, a 501(3)(c) charitable organization.
The group favors more stringent environmental policy regulations on the
private sector and especially wants cap-and-trade legislation so that
companies will be forced to lower their greenhouse gas emissions and buy
carbon credits.
The alliance CEO is Cathy Zoi, a former
environmental advisor to President Bill Clinton. Gore is chairman of the
board, which also includes environmental activist Theodore Roosevelt
IV, Clinton EPA Director Carol Browner, the President George H.W. Bush’s
National Security Advisor Brent Scowcroft and Reagan-era EPA Director
Lee Thomas. Gore has reportedly given the alliance $250,000 and has said
he will donate his share of the profits from An Inconvenient Truth to
the group.
Last September, the alliance cheered as California
Gov. Arnold Schwarzenegger (R.) signed into law the Global Warming
Solutions Act of 2006. California has the world’s sixth-largest economy
and is the world’s 12th-largest source of CO2 emissions. The mandate
promises to cut emissions by 25% by 2020. Unlike other state and
regional programs to cut carbon emissions and promote alternative
energy, the California law is the first to embrace a cap-and-trade
program. It has won the support of litigious environmental groups and
business and financial groups that want to buy and sell pollution
credits.
Force Everyone to Play
This year Congress is
considering a slew of cap-and-trade bills to reduce carbon emissions.
The bill getting the most attention is sponsored by Senators John McCain
(R.-Ariz.) and Joseph Lieberman (ID.-Conn.). It would apply to the
entire economy, would reduce emissions in stages (to 2004 levels by
2012, 1990 levels by 2020, and 60% below 1990 by 2050) and would set up a
cap-and-trade market for emission credits.
The push is now on to
force action from the Bush Administration. On May 14 of this year,
President Bush signed an executive order directing federal agencies to
craft regulations by the end of next year that will “cut gasoline
consumption and greenhouse-gas emissions from motor vehicles.” His “20
in 10” plan to cut gas consumption by 20% in the next 10 years focuses
on increasing the fuel economy standards for cars and light trucks and
mandating increased use of alternative fuels.
But the President
is unwilling to call for mandatory nationwide emissions rules and
instead favors voluntary carbon-emission cuts in the private sector.
This is deeply frustrating to all the brokers, wheeler-dealers and
interest groups that want to jump on the cap-and-trade bandwagon. There
are billions of dollars to be made in trading emissions credits. But
first the federal government must force everyone to play the game.
As for Al Gore, the former Vice President brings emotional fervor to
his carbon crusade. He travels the country displaying charts and graphs,
quoting scientific experts and appealing to philosophers and religious
leaders to save the planet from global warming. But he says nothing
about his business partners who yearn to trade on the emerging carbon
market. And the media pay no attention to the companies offering “carbon
advisory services” that will profit from federal carbon emission
controls.
Perhaps it’s about time they did.
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Ms. Corey Barnes is a freelance writer and blogger for the Polireport in Washington, D.C.
[http://72.14.253.104/search?q=cache:tfgkaeyQut0J:www.humanevents.com/article.php%3Fid%3D22663+Who+is+behind+gore&hl=en&ct=clnk&cd=3&gl=us&ie=UTF-8]
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