Climate Enron may be heading for a crash
[Editor's note: This story originally was published by Real Clear Wire.] By Duggan Flanakin Real Clear Wire The modern American version of “the environmental emperor has no clothes” until now has been the rise and fall of Enron. As former Ken Lay speechwriter Robert Bradley, Jr., says, “(T)he cause of Enron’s financial bankruptcy were at…
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[Editor's note: This story originally was published by Real Clear Wire.]
By Duggan Flanakin
Real Clear Wire
The modern American version of “the environmental emperor has no clothes” until now has been the rise and fall of Enron. As former Ken Lay speechwriter Robert Bradley, Jr., says, “(T)he cause of Enron’s financial bankruptcy were at root philosophical…. Enron’s leaders were certainly engaged in massive philosophical fraud – an attempt to cheat reality itself.”
For years, Enron was hailed as one of the most forward-thinking corporations, and Lay, its founder and CEO, was a man in great demand. During his 13-year tenure that ended with a bang in 2021, Lay collected over $220 million in cash and company stock, and just months before “the largest bankruptcy in America” (at that time) Lay gave five presentations at the 2001 World Economic Forum meeting in Davos.
As Bradley, now the CEO of the Institute for Economic Research, recounts, Lay was the salesman promoting a business model developed by Jeffrey Skilling, who Lay had brought on as chief operating officer. In Skilling’s “mark-to-market” accounting, anticipated future profits from any deal were accounted for by estimating their present value rather than historical cost. Thus, argued Skilling, Enron did not really need “assets.”
It just needed connections.
And that was Lay’s special skill. His idea was to embrace a “revolution always” business philosophy, which Bradley called “a perpetual search for the first-mover advantage.” To that end, he became all things to all people, winning favor from Republicans, Democrats, environmentalists, minorities, and business leaders. His “illusion-making” in effect created a smokescreen so strong that nearly everyone was caught by surprise when the bubble burst.
[Editor’s note: As an environmental writer in Louisiana, I wrote in 1999 that the U.S. Senate rejection of the Kyoto Protocol would ensure Enron’s soon demise. I based my view on the fact that the company lacked assets and had built its presumed net worth on Kyoto largesse. As Bradley points out, Enron relied heavily on government favors.]
Today, the collapse of FTX and the recent criminal conviction of founder and CEO Sam Bankman-Fried (who is facing a lifetime behind bars) brings Enron, Skilling, and Lay to mind. But, despite the magnitude of SBF’s fraud, it pales in comparison to the ongoing fraud being perpetrated mostly on America and its Western allies in the name of “climate change.”
A bit like FTX, but unlike Enron, there are plenty of warning signs that the “Green Revolution” is about to come tumbling down and its loudest advocates brought to account. The main thing keeping the mirages afloat today is the massive egos and their investments in folly that may leave them going down with the ship.
While the “Green Revolution” has been under way for decades, it is the Biden Administration that has imposed mandates, attacked popular energy sources and transportation options, and waged war against traditional industrial development. Europeans and states like California had earlier imposed their own mandates with supposedly “hard” deadlines for abolishing the use of oil, natural gas, coal, and every tool or vehicle that uses them.
The green war on fossil fuels, as fleshed out in the “Net Zero” campaign, is perhaps history’s greatest example of philosophical fraud.
“To dream the impossible dream” and turn it into reality would mean sacrificing an estimated 6,000 useful products that rely on byproducts from crude oil refineries – products that range from asphalt for highways to fertilizers, cosmetics, synthetic rubber, medicines and medical devices, cleaning products, plastics, so many more. The 3 billion who live without the benefits fossil fuels have provided are also the poorest, sickest, and most vulnerable humans on the planet.
Cracks are already developing in the “Net Zero” world, what with countries backing away from the mandates they so recently touted while marching around like peacocks in mating season. In March the European Union reached an agreement with Germany to formally back away from its total ban on internal combustion engines in 2035.
Still, 30 countries are signatories to the Glasgow Declaration that would force all vehicles sold by 2040 to have zero carbon dioxide emissions, and 21 others have crafted plans to ban new ICE vehicle sales earlier than 2040. Dozens of major cities and states, most notably California and the California clone states, intend to disallow new ICE vehicles by 2035.
Several problems stand in the way of their utopian dream. Even EV advocates are now admitting the “EV-olution” has to overcome “serious issues” - like the use of child labor in lithium mining, the woefully inadequate EV charging infrastructure, and an unprepared power grid. Yet the biggest obstacle is that a majority of the Earth’s people object to having EVs – or heat pumps, or electric stoves, and so on -- shoved down their throats.
EVs may be fine for short-trip urban travel but not for construction equipment, airplanes, or even urban buses, as evidenced by the recent horrific scene in San Francisco when a Google-operated electric bus lost power and slid backwards downhill into nine vehicles. Today’s EVs are wholly impractical for mountain and prairie residents or others making long trips (worse with children).
Like Ken Lay with Enron, the Green revolution has relied heavily on government subsidies and a “revolution always” business philosophy aimed at making pariahs of anyone who dares oppose the grandiose – but fatally flawed – plan.
During the Obama Administration, Solyndra went under despite a $535 million government-guaranteed loan, none of which was paid back. Forbes, citing OpenTheBooks.com, noted that taxpayers were left holding the notes for $400 million given to Abound Solar, $280 million wasted by CaliSolar, $193 million doled out to Fisker Automotive (with another $336 million canceled), and $132 million to A123 Systems (a failed battery maker).
Undaunted, the Biden Administration’s $2.3 trillion “jobs” package was rife with more subsidies for technologies that by their own admission are unsustainable. Yet despite all the free money, Ford, General Motors, and many other automakers are backing away from multibillion-dollar investments in new EV factories as new EV sales have slowed despite increased rebates.
Ford in March projected a loss of $3 billion on electric vehicles in 2023, offsetting profits of as much as $14 billion from its other divisions. Ford also admitted losses of $900 million in 2021 and $2.1 billion in 2022 in its EV division. Ford and GM believe their EV fortunes will turn around by 2025, but those rosy scenarios seem wholly dependent upon Biden (or an even “greener” Democrat) winning the White House next November.
Even with a Green win in 2024, reality will still bite the EV dream. China has been quietly moving toward total dominance in the global EV marketplace – largely because it controls the lithium battery market. Financial Times wrote in September that China is so far ahead in the EV market that its competitors are trailing in the dust.
Biden’s reliance on huge subsidies to underwrite the “Green Revolution” has brought soaring inflation to the U.S. that is taking away purchasing power faster than it can increase subsidies and Mafia-style “incentives” (you will buy what we want you to buy, or else!).
Lay died of a heart attack shortly after his trial, leaving behind “a legacy of shame” characterized by “mismanagement and dishonesty” that led Politico to rank him as the third-worst American CEO of all time.
America’s doddering President Biden, now facing pre-impeachment hearings for other alleged mistakes, may not live to see his name smeared as Lay’s once was. But does anyone truly believe Biden is calling all the shots here?
Who will, then, get the blame if America’s forced march to EV subservience to Xi’s China brings an end to America’s hegemony on the world stage?
Duggan Flanakin is a senior policy analyst for the Committee for a Constructive Tomorrow and a frequent writer on public policy issues.
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