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 Weeks
before announcing a $300-million, three-year advertising campaign to
raise awareness about global warming, Al Gore was conducting a slide
show for a group of investors in Monterey, Calif., touting companies
such as Bloom Energy, Amryis , Mascoma and other firms that are not
household names -- yet.
These bio-fuel and green technology firms could be poised to take off, Gore told his audience.
"Here
are just a few of the investments I personally think make sense," he
said during the March 1 presentation. "I have a stake in these so I'll
have a disclaimer there." (See Video)
Gore's admitted stake in those companies
comes from his partnership in the venture capital firm, Kleiner Perkins
Caufield & Byers (KPCB). Gore joined the firm last November,
forging a partnership between KPCB and the London-based Generation
Investment Management, a firm Gore chairs, and which steers investments
in green and "sustainable" companies.
This month, KPCB announced
it has invested $500 million into start-up "green growth" companies,
and another $700 million into more established greentech, information
technology and life science ventures.
The seed money is intended
to "grow" the companies so they can be publicly traded. Both funds are
closed to further investment. Last week, Generation Investment
Management reportedly closed a $683-million "Climate Solutions Fund" to
further investment.
The firms, with similar goals, differ in
that GIM focuses mostly on public equities, while KPCB focuses on
startup or expanding companies that haven't gone public yet.
But
without government action on climate change, some business analysts say
green companies backed by KPCB are either unlikely to be profitable or
that their growth will be slow.
To Gore's critics, his financial
stake in businesses that could profit from government policies designed
to fight global warming demonstrates a motivation other than a selfless
desire to protect the planet.
Gore has lobbied Congress and
state governments to enact bolder environmental regulations. Gore's
defenders counter that he and his partners are simply looking at
companies that will have long-term sustainability during the "climate
crisis."
"There are a bunch of folks that stand to make real
money, who have invested a lot in companies that are not worth real
money until the agenda that this ad campaign is advocating is
achieved," Chris Horner, a senior fellow at the Competitive Enterprise
Institute, a free-enterprise think tank, said in an interview.
Companies
in the KPCB portfolio, as start-up companies, might be in greater need
of a helping hand from government policy changes, but the larger, more
established firms in the GIM portfolio also could benefit if the
government manipulates the current market by mandating alternative
fuels or imposing a cap and trade system.
As a private citizen,
Gore is not required to publicly disclose how much of his personal
fortune is invested in the venture capital firm. KPCB spokeswoman
Brianna Woon declined to say how much Gore had invested in the firms,
and she said the firms couldn't comment at this time on whether the
greentech companies can succeed without government action.
Lack
of government action could delay profits, but the free market is
nonetheless moving toward clean energy on its own, said Gary Patterson,
an analyst with the Fiscal Doctor Inc., of Wellesley, Mass. He predicts
a good return for the venture capital firm's green investments.
"It
would be very helpful if you have government initiative. Without it, it
will take longer for these to be economically viable," Patterson told Cybercast News Service
However,
Bert Ely, a financial analyst with Ely & Associates of Alexandria,
Va., is skeptical that the kind of green investment portfolio Gore is
advocating can be profitable without government action. History has
shown green companies to be risky ventures, he says
"Wind power, solar and bio-fuels all operate on tax
subsidies or purchase requirements," Ely told Cybercast News Service.
"The government stimulates demand. The most notorious subsidy is the 51
cent gas credit for ethanol."
"To
the extent that you got some kind of government mandate here, whether
it is cap-and-trade or a purchasing requirement, a taxpayer subsidy, to
me that's a dicey way to look for a return on a venture because what
the government giveth it can taketh away -- and often does," Ely said.
"You're making a political bet, not an economic bet."
(A cap and
trade system would set limits on the amount of carbon a company can
emit. The limits are called a "cap." If a company has to exceed the
limit, it would be allowed to buy credits from companies that pollute
less. This transfer would be the "trade.")
In public statements, KPCB has pointed to the likelihood of new government policies as a selling point for investors.
"The
growing sense of global urgency over our twin crisis -- climate change
and energy security -- is now driving businesses to become green,
consumers to demand green and policy makers to drive policies to
accelerate the market adoption of green products," KPCB partner John
Denniston said in a May 1 statement announcing the new ventures.
James
Ritterbusch, a petroleum analyst and president of Galena, Ill.-based
Ritterbusch & Associates, is skeptical about the ability of the
green firms to succeed without government help.
"It would be a challenge," Ritterbusch told Cybercast News Service
. "Ethanol would be a model. It was very difficult for ethanol to make
inroads at all. Without a subsidy, it's an uphill battle."
Gore's 'We campaign'
Gore's ad campaign, titled "We," includes several commercials.
In one of them, the conservative Rev. Pat Robertson joins the liberal
Rev. Al Sharpton in calling for action to stop global warming. Another
TV ad features former Republican House Speaker Newt Gingrich and
current Democratic House Speaker Nancy Pelosi warning about the danger
of climate change.
Neither Gore's Nashville-based office nor
his non-profit organization Alliance for Climate Protection (ACP),
which is sponsoring the campaign, responded to inquiries for this
report.
The non-profit ACP has partnerships with United Steel Workers of American and the Girl Scouts of America, among others.
The ACP's Web site says the advertising effort is not just intended to lobby for legislation.
"The
We campaign is not about supporting a particular bill or resolution,"
the site says. "It is about stimulating a cultural shift around this
issue. Unfortunately, our leaders won't take the bold steps necessary
until the American people demand real change. The We campaign is
designed to catalyze this shift in public awareness and engagement."
Green business 'will make money'
Last
November KPCB and Generation Investment Management announced a "global
collaboration to find, fund and accelerate green businesses, technology
and policy solutions with the greatest potential to help solve the
current climate crisis."
When Gore joined KPCB as a partner, KCPB's John Doerr joined the Generation Investment Management advisory board.
GIM's
long-term strategy for investing goes further than environmental
factors, said company spokesman Richard Campbell. He said other
sustainability factors, such as corporate governance and staff
retention, also play a role.
"It's too simple to say that.
It's just too simplistic. Generation's success is not based on a cap
and trade system in the U.S.," Campbell told Cybercast News Service.
"I
don't think you can read anything into Al Gore's campaign to make
people understand the severity of the climate crisis for the last few
decades with the performance of the fund management business that he
chairs," Campbell continued.
The GIM portfolio includes investments in firms such as Johnson Controls, which could profit from the battery systems for low-carbon emissions vehicles in the future. It also includes General Electric, which has teamed with the United States Climate Action Partnership (USCAP), an alliance promoting a cap and trade system to the United States.
Campbell
said the purpose of GIM is to make money for its investors, and
anticipating the climate crisis is one way of doing that.
"Generation
believes that the climate crisis will have an enormous impact on
financial services, will have an enormous impact on business," Campbell
continued. "Those businesses that are best able to take advantage of
the opportunity for climate change will make money and those business
that aren't ready to face up to the challenges of the climate crisis
will lose money. That is the basic premise about long term investment."
Other
companies in the Generation portfolio are Metabolix, a firm that
develops bio-plastics, and alternative fuels; Waters Inc., a laboratory
company that provides products for health care delivery, environmental
management food safety and water quality; and Techne Corporation, which
manufactures biological products.
"He's already in the global warming business," Matthew Vadum told Cybercast News Service
. Vadum is a research associate for the Capital Research Center, a
conservative think tank that has investigated Gore's financial
interests in the global warming movement. "I believe Al Gore is a true
believer, but he also is a smart businessman." Source
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