Green Energy Investors Look to Cash in on Paris Talks

Coalition of executives and financiers seeks government subsidies as U.N. climate talks commence

Tom Steyer / AP
December 1, 2015

A group of millionaires and billionaires that includes major investors in green energy are using the international climate talks kicking off this week to push for more government subsidies for the types of companies in which they are investing.

The Breakthrough Energy Coalition on Monday unveiled policy proposals demanding that governments step up their "investment" in green energy companies. The coalition’s founding members include a host of financiers with significant green energy portfolios.

At the same time, the group said it will be leveraging government support in its own investment work, which will target early-stage green energy companies.

Green energy is not sufficiently appealing to private investors at present, the coalition says. Therefore government must step in and provide extensive capital for firms working on wind, solar, and other renewable energy technologies – the types of firms that Breakthrough will be backing.

The effort comes as world leaders gather for a United Nations conference on climate change, where the Obama administration is expected to push for greater government action to reduce U.S. and global carbon emissions.

"In the current business environment, the risk-reward balance for early-stage investing in potentially transformative energy systems is unlikely to meet the market tests of traditional angel or VC investors—not until the underlying economics of the energy sector shift further towards clean energy," the Breakthrough Coalition’s website states.

"This collective failure can be addressed, in part, by a dramatically scaled-up public research pipeline, linked to a different kind of private investor with a long term commitment to new technologies who is willing to put truly patient flexible risk capital to work," it adds.

The coalition’s founding members include some of the more prominent such investors. Venture capitalists such as Vinod Khosla and John Doerr and hedge funders such as Tom Steyer and Nathaniel Simons are among the investors listed as founding coalition members.

Khosla and Doerr are two of Silicon Valley’s top investors in green energy companies, Khosla through his eponymous venture capital firm and Doerr by way of the venture capital giant Kleiner Perkins Caufield & Byers.

Simons is listed on founding coalition documents as a co-founder of Prelude Ventures, a private equity firm that invests in green energy and energy efficiency companies.

Steyer is among the most politically active environmentalists in the country. In addition to his deep-pocketed super PAC, NextGen Climate Action, he is the co-founder of Advanced Energy Economy, a trade association of green energy firms.

His nonprofit grant-making group, the TomKat Charitable Trust, is a limited partner in two investment funds with stakes in green energy and energy efficiency companies.

Profits derived from those ventures are recycled back into TomKat and its tax-exempt environmental activities, according to a spokesperson for Steyer. "Tom Steyer and his wife, Kat, have signed the Giving Pledge to donate the vast majority of their wealth to charitable purposes," the spokesperson noted in an email.

Steyer has repeatedly touted the profit potential of green energy, stating in 2012 remarks on AEE’s mission that such technologies represent "a chance to make a lot of money."

"I’ve never been driven by money," the billionaire hedge fund manager declared two years later. But for those who are, he told a gathering of environmentally driven businesses in New Orleans, green energy "is a great opportunity for you to make a bunch of money."

The types of investors that Breakthrough hopes to enlist in its efforts "will certainly be motivated partly by the possibility of making big returns over the long-term, but also by the criticality of an energy transition," its website says.

They hope to have the backing of the 20 governments who have signed on to an effort called Mission Innovation. Those governments, which include the United States, unveiled a joint statement on Monday calling for members to "double governmental investment in clean energy innovation."

"Business needs to play a vital role in the commercialization and cost-effectiveness of clean energy breakthroughs, and participating countries commit to work closely with the private sector as it increases its investment in the earlier-stage clean energy companies that emerge from government research and development programs," the statement says.

William Yeatman, an energy policy expert at the Competitive Enterprise Institute, suggested in an email that that type of collaboration between business and government tends to enrich the politically connected.

"There was a $100 billion ‘public-private’ green energy push in the stimulus, which worked out terribly for the public, but richly for cronies of the Obama administration," Yeatman wrote. "I'd rather not get another dose of that."

Published under: Cronyism , Green Energy