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."
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