Bush's CO2 Flip-Flop: The Surprising Truth

Everyone thought the president was caving to big energy. Guess what? Energy companies feel betrayed, too

US President George W. Bush (C) makes remarks 20 March 2001 to women business leaders at the White House in Washington, DC as First Lady Laura Bush and EPA Administrator Christine Todd Whitman look on, March 20th, 2001. Credit: LUKE FRAZZA/AFP/Getty

Last fall, it seemed that George W. Bush had found religion on global warming, declaring in his campaign that he favored putting mandatory limits on carbon-dioxide emissions. He promised to act – if not out of personal conviction, then at least to outflank Al Gore on the issue. After he took office in January, his Environmental Protection Agency administrator, Christie Whitman, traveled the world assuring America's allies that the Bush administration was committed to reducing the U.S. share of world CO2 emissions.

Then, on March 13th, President Bush announced that he does not believe the science on global warming. He threw out his carbon-dioxide promise and reiterated his opposition to the Kyoto protocol, the only international process aimed at averting a potential climate disaster. Two weeks later, Whitman announced that, so far as the Bush administration was concerned, the Kyoto agreement was dead. But surprisingly, many high-ranking officials in the industries that Bush was trying to protect say that he made a big mistake.

This is not just another tired tale of a public official caught in the crossfire between smoke-barfing, moneyed utilities and wacky environmentalists. This is Republican against Republican: The coal lobby and a few utilities used their clout with the president to stifle anti-pollution initiatives by other utility companies whose executives want to take steps to reduce greenhouse gas emissions before it is too late. "If George Bush was trying to pick out the smallest sliver of energy companies he could have helped with this move, he couldn't have done any better," says one peeved executive from a Midwestern utility company that burns piles of coal. "We want him to know that if he thought he was doing a favor to some big companies, there are other big companies that don't think he did."

The men who run these companies are posing serious questions to the Bush administration: If the president doesn't believe the consensus of scientists on global warming, upon whose science and whose advice does he base his skepticism? And if Bush, in fact, believes global warming is real, as he and Whitman insist every time they get the chance, what do they plan to do about it?

To understand why Bush decided to take a bold campaign stance on global warming, it is necessary to understand why Vice President Al Gore decided not to. On July 31st, 1998, Gore called in corporate executives from the power, steel and aluminum industries to try and persuade them to make voluntary cuts in emissions of heat-trapping gases. Seated beside Gore during the meeting was Linn Draper, head of American Electric Power, one of the country's utility giants. Draper told the vice president that AEP would be willing to do something unprecedented – agree to limits on CO2 emissions. In return, the administration would allow utility companies flexibility in how they met these limits. But most significant, they would now get extra time to comply with regulations mandating cuts in emissions of gases that cause smog and acid rain, as well as pending regulations for reducing emissions of mercury (which poison lakes and streams). Both sides thought this was a workable compromise and perhaps a viable alternative to Kyoto.

Talks with the White House continued, and more utility companies lined up. But Gore's people failed to clinch a deal before November 1999, when the EPA filed suit against several power companies, including AEP, alleging that they had failed to abide by emissions regulations at plants that had undergone technological upgrades. Suddenly the White House could no longer negotiate with the utilities on issues connected with the lawsuit. And during his presidential campaign, Mr. Ozone could only advocate voluntary reductions of carbon dioxide.

Late last summer, with Gore riding a post-convention bounce, the Bush campaign was looking for any edge. With Bush under attack for his environmental record in Texas, representatives of Environmental Defense and other advocacy organisations suggested that he get behind the carbon-dioxide-reduction requirement that Gore had effectively abandoned. The proposal won strong backing from Republicans in the utility industries and longtime Bush supporters. These included Kenneth Lay, chairman of Enron Corp., a natural-gas company based in Houston, which stood to win big if power companies abandoned coal and turned to cleaner-burning gas.

On September 29th. the Bush campaign released a position paper saying that, as president, Bush would seek legislation setting mandatory limits on emissions of carbon dioxide along with mercury, sulfur dioxide and nitrogen oxides. The campaign underscored the fact that Bush had demanded mandatory cuts, while Gore had called only for voluntary limits. The utility companies that had backed the Gore plan breathed a sigh of relief.

"We had no idea where Bush stood until then," says one utility-company executive who had worked on the trade-off. "There was no equivocation. And we thought it meant that we were going to get a resolution of this issue no matter who won the election." A second utility executive calls Bush's move "brilliant," saying, "The general idea was to outflank Gore on the environment. And it worked. Gore didn't know what to do. All of a sudden, Bush had support in industry and in some of the environmental community."


After Bush's inauguration, Whitman began working to realize his campaign promise, Bush, she asserted on the February 26th broadcast of CNN's Crossfire, has been "very clear that the science is good on global warming. It does exist. There is a real problem that we, as a world, face from global warming. And to the extent that introducing CO2 to the discussion is going to have an impact on global warming, that's an important step to take."

Whitman was not the only Bush Cabinet member active on the issue. At Bush's first Cabinet meeting, Secretary of the Treasury Paul H. O'Neill, former chief executive of the aluminum giant Alcoa, distributed a passionate treatise comparing the seriousness of the global-warming threat to that of rogue states with nuclear weapons. "The global climate-change issue is one where I think those of us in positions of responsibility, if we're going to pretend to be leaders, need to actually lead and not wait for somebody to hammer us into submission," O'Neill wrote. The morning after Whitman's CNN appearance, O'Neill gave Bush a private memo urging him to set out a policy on climate change.

But Whitman and O'Neill were drowned out. Republican senators, among them Chuck Hagel of Nebraska and Larry Craig of Idaho, were complaining via letters and phone calls. On the receiving end were Vice President Dick Cheney; Karl Rove, Bush's political adviser; Lawrence Lindsey, the president's economic adviser; and tohers. Myron Ebell, who directs global-warming policy for the Competitive Enterprise Institute, explains the critics' position: "There has been a cabal behind Bush's promise, and some of the industry people closest to the administration were for it." Ebell includes O'Neill, Whitman and Lay in that group "They were attempting to commit the Bush adiministration to the Kyoto agenda. And they do not understand that the treaty would require the U.S. to spend trillions of dollars in order to save a few billion on the costs or potential climate change."

The lobbyists for the electricity-generating companies and the coal industry – which gave Republicans eighty-eight cents of every dollar of campaign money it contributed – also joined the attack. Utility-industry officials, who asked to remain unnamed, say they suspect the White House was approached by the Peabody Group, a huge coal-mining company whose chairman, Irl Engel-hardt, advised the Bush transition team on energy issues as well as by big electricity producers such as Southern Company, one of the country's most infamous polluters.

Bush's advisers brought these complaints to him on March 5th. On March 13th, the White House sent a letter to Sen. Hagel announcing Bush's change of heart. Several Cabinet members, including O'Neill and Secretary of State Colin Powell, tried to soften its language. But the wording stood, and Powell, who foresaw international criticism, was reportedly told that America's carbon dioxide was a purely "domestic" issue. The president explained his decision with a now-familiar refrain about the power fiasco in California. "I was responding to reality," Bush said. "And reality is, the nation has got a real problem when it comes to energy." He added that limits on carbon-dioxide emissions would push electricity producers away from coal and toward natural gas, and that this would drive electricity costs up. "We're in an energy crisis," he insisted.

Ian Bowles, an energy adviser at the National Security Council during the Clinton administration, who stayed on until Bush's reversal on global warming, refutes the energy-crisis reasoning: "We have three disparate, short-term energy challenges: We have seen a botched deregulation in California; this is specific to that state – it doesn't relate to anything larger than that. In terms of natural gas, we have some tight distribution where we need to build infrastructure, but we do have the gas. And we have some refining shortages in crude. Taken together, this is not a national energy crisis that would preclude addressing carbon dioxide over the long term."

Clearly, many utility executives agree, Frank Cassidy, the president and chief operating officer of the New Jersey-based PSEG Power, one of the world's largest independent electricity-generating companies, says Bush's decision has increased the uncertainty facing the power industry. Comprehensive emissions regulations "might give us cleaner air sooner, address global warming sooner and end the endless litigation," he says. "There has to be a forcing function to get the manufacturers to start developing the technology."

Off the record, the statements from the utility corner become less politic. (One vice president referred to the language in Bush's letter as the handiwork of "bozos.") Companies that advocated CO2 reduction are bitter; they feel Bush's reversal could place them at a competitive disadvantage against those that have no intention of cleaning up unless forced to do so.

"Phasing in limits on carbon dioxide is not going to send the utility companies rushing to switch over to natural gas, and it is not going to send electricity bills soaring into the stratosphere," says another utility executive from a predominantly coal-burning company. "We've got old, dirty coal plants. We want to shut them down and replace them with new, cleaner and more efficient ones that will be better for the environment, the economy and the reliability of the energy supply, Without this regulatory certainty, it will be hard to plan for future expenditures and hard to keep costs down."

European leaders, meanwhile, were outraged by Bush's "Kyoto is dead" decision. During the same week that Bush was reneging on his carbon-dioxide campaign pledge, Great Britain's prime minister, Tony Blair, took a strong stand, announcing that he wanted his country to lead the world in a new "green industrial revolution" and that he was committing new funds to the development of renewable energy. It would be irresonsible, he said, to treat predictions about global warming as scaremongering: "They represent the considered opinions of some of the world's best scientists. We cannot afford to ignore them."