This Changes Everything
Page 29
“It was quite an experience having a brilliant communicator like Al Gore give me a personal PowerPoint presentation,” Branson writes of the meeting. “Not only was it one of the best presentations I have ever seen in my life, but it was profoundly disturbing to become aware that we are potentially facing the end of the world as we know it. . . . As I sat there and listened to Gore, I saw that we were looking at Armageddon.”4
As he tells it, Branson’s first move following his terrifying epiphany was to summon Will Whitehorn, then Virgin Group’s corporate and brand development director. Together “we carefully discussed these issues and took the decision to change the way Virgin operates on a corporate and global level. We called this new Virgin approach to business Gaia Capitalism in honor of James Lovelock and his revolutionary scientific view” (a reference to Lovelock’s theory that the earth is “one single enormous living organism and every single part of the ecosystem reacted with every other part”). Not only would Gaia Capitalism “help Virgin to make a real difference in the next decade and not be ashamed to make money at the same time,” but Branson believed it held the potential to become “a new way of doing business on a global level.”5
Before the year was out, he was ready to make his grand entrance onto the green scene (and Branson knows how to make an entrance—by parachute, by hot air balloon, by Jet Ski, by kite-sail with a naked model clinging to his back . . . ). At the 2006 Clinton Global Initiative annual meeting in New York City—the highest power event on the philanthropic calendar—Branson pledged to spend roughly $3 billion over the next decade to develop biofuels as an alternative to oil and gas, and on other technologies to battle climate change. The sum alone was staggering but the most elegant part was where the money would be coming from: Branson would divert the funds from profits generated by Virgin’s fossil fuel–burning transportation lines. As Branson explained in an interview, “Any dividends or share sales or any money that we make from our airlines or trains will be ploughed back into tackling global warming, into investing in finding new, clean fuels and investing in trying to find fuels for jet engines so that we can hopefully reverse the inevitability of, you know, of destroying the world if we let it carry on the way it’s going.”6
In short, Branson was volunteering to do precisely what our governments have been unwilling to legislate—require that the profits being earned from warming the planet be channeled into the costly transition away from these dangerous energy sources. The director of the Natural Resources Defense Council’s Move America Beyond Oil campaign said of Virgin’s renewable energy initiatives, “This is exactly what the whole industry should be looking at.” Furthermore, Branson pledged that if its transportation divisions weren’t profitable enough to meet the $3 billion target, “the money will come out of our existing businesses.” He would do “whatever it takes” to fulfill the commitment because “what is the point of holding back when there will be no businesses” if we fail to act?7
Bill Clinton was dazzled, calling the $3 billion pledge “groundbreaking, not only because of the price tag—which is phenomenal—but also because of the statement that he is making.” The New Yorker described it as “by far the biggest such commitment that has yet been made to fight global warming.”8
But Branson wasn’t finished. A year later he was back in the news with the “Virgin Earth Challenge”—a $25 million prize that would go to the first inventor to figure out how to sequester one billion tons of carbon a year from the air “without countervailing harmful effects.” He described it as “the largest ever science and technology prize to be offered in history.” This, Branson pronounced, was “the best way to find a solution to the problem of climate change,” elaborating in an official statement that, “If the greatest minds in the world today compete, as I’m sure they will, for The Virgin Earth Challenge, I believe that a solution to the CO2 problem could hopefully be found—a solution that could save our planet—not only for our children but for all the children yet to come.”9
And the best part, he said, is that if these competing geniuses crack the carbon code, the “ ‘doom and gloom’ scenario vanishes. We can carry on living our lives in a pretty normal way—we can drive our cars, we can fly our planes, life can carry on as normal.”10 Indeed the idea that we can solve the climate crisis without having to change our lifestyles in any way—certainly not by taking fewer Virgin flights—seemed to be the underlying assumption of all of Branson’s various climate initiatives.
With the $3 billion pledge, he would try to invent a low carbon fuel that could keep his airlines running at full capacity. If that failed, and carbon still needed to be burned to keep the planes in the air, then the prize would surely help invent a way to suck the heat-trapping gas out of the sky before it’s too late. To cover one more base, in 2009 Branson launched the Carbon War Room, an industry group looking for ways that different sectors could lower their emissions voluntarily, and save money in the process. “Carbon is the enemy,” Branson declared. “Let’s attack it in any possible way we can, or many people will die just like in any war.”11
Billionaires and Broken Dreams
For many mainstream greens, Branson seemed to be a dream come true: a flashy, media-darling billionaire out to show the world that fossil-fuel-intensive companies can lead the way to a green future using profit as the most potent tool—and proving just how serious he was by putting striking amounts of his own cash on the line. As Branson explained to Time, “If the government can’t deliver, it’s up to industries to [do it] themselves. We have to make it a win-win for all concerned.”12 This is what groups like the Environmental Defense Fund had been saying since the 1980s in explaining why they partnered with big polluters, and what they had attempted to prove with the carbon market. But never before had there been a single figure willing to use his own multibillion-dollar empire as a test case. Branson’s personal account of the impact of Gore’s PowerPoint also seemed to confirm the notion, cherished in many green circles, that transforming the economy away from fossil fuels is not about confronting the rich and powerful but simply about reaching them with sufficiently persuasive facts and figures and appealing to their sense of humanity.
There had been major green philanthropists before. Men like financier Jeremy Grantham, who underwrites a large portion of the U.S. and British green movement, as well as a lot of related academic research, with wealth from Grantham, Mayo, Van Otterloo & Co., the investment management firm he cofounded.I But these funders tended to stay behind the scenes. And unlike Branson, Grantham has not attempted to turn his own financial firm into proof that the quest for short-term profits can be reconciled with his personal concerns about ecological collapse. On the contrary, Grantham is known for his bleak quarterly letters, in which he has mused on our economic model’s collision course with the planet. “Capitalism, by ignoring the finite nature of resources and by neglecting the long-term well-being of the planet and its potentially crucial biodiversity, threatens our existence,” Grantham wrote in 2012—but that doesn’t mean savvy investors can’t get very rich on the way down, both from the final scramble for fossil fuels, and by setting themselves up as disaster capitalists.13
Take Warren Buffett, for instance. For a brief time, he too seemed to be auditioning for the role of Great Green Hope, stating, in 2007, that, “the odds are good that global warming is serious” and that even if there is a chance it won’t be “you have to build the ark before the rains come. If you have to make a mistake, err on the side of the planet. Build a margin of safety to take care of the only planet we have.”14 But it soon became clear that Buffett was not interested in applying this logic to his own corporate assets. On the contrary, Berkshire Hathaway has done its best in subsequent years to make sure those rains come with ferocity.
Buffett owns several huge coal-burning utilities and holds large stakes in ExxonMobil and the tar sands giant Suncor. Most significantly, in 2009 Buffett announced that his company would spend $26 billion to buy what it didn’
t already own of the Burlington Northern Santa Fe railroad. Buffett called the deal—the largest in Berkshire Hathaway history—“a bet on the country.”15 It was also a bet on coal: BNSF is one of the biggest coal haulers in the United States and one of the primary engines behind the drive to greatly expand coal exports to China.
Investments like these push us further down the road toward catastrophic warming, of course—and Buffett is poised to be one of the biggest winners there too. That’s because he is a major player in the reinsurance business, the part of the insurance sector that stands to profit most from climate disruption. As Eli Lehrer, the insurance industry advocate who defected from the Heartland Institute after its controversial billboard campaign, explains, “A large reinsurer like Warren Buffett’s Berkshire Hathaway might simultaneously underwrite the risk of an industrial accident in Japan, a flood in the U.K., a hurricane in Florida, and a cyclone in Australia. Since there’s almost no chance that all of these events will happen at the same time, the reinsurer can profit from the premiums it earns on one type of coverage even when it pays out mammoth claims on another.” Perhaps it’s worth remembering that Noah’s Ark was not built to hold everyone, but just the lucky few.16
The newest billionaire raising big hopes in the climate scene is Tom Steyer, a major donor to various climate and anti–tar sands campaigns, as well as to the Democratic Party. Steyer, who made his fortune with the fossil-fuel-heavy hedge fund Farallon Capital Management, has made some serious attempts to bring his business dealings in line with his climate concerns. But unlike Branson, Steyer has done this by leaving the business that he founded, precisely because, as The Globe and Mail reported, “it valued a company’s bottom line, not its carbon footprint.” He further explained, “I have a passion to push for what I believe is the right thing. And I couldn’t do it in good conscience and hold down a job—and get paid very well for doing a job—where I wasn’t directly doing the right thing.”II This stance is very different from Branson’s, who is actively trying to prove that it is possible for a fossil-fuel–based company not just to do the right thing but to lead the transition to a clean economy.17
Nor is Branson in precisely the same category as Michael Bloomberg and Bill Gates, who have both used their philanthropy to aggressively shape the kinds of climate solutions on offer. Bloomberg, for instance, has been held up as a hero for his large donations to green groups like the Sierra Club and EDF, and for the supposedly enlightened climate policies he introduced while mayor of New York City.III18
But while talking a good game about carbon bubbles and stranded assets (his company is set to introduce the “Bloomberg Carbon Risk Valuation Tool” to provide data and analysis to its clients about how fossil fuel stocks would be impacted by a range of climate actions), Bloomberg has made no discernible attempt to manage his own vast wealth in a manner that reflects these concerns. On the contrary, as previously mentioned, he helped set up Willett Advisors, a firm specializing in oil and gas assets, for both his personal and philanthropic holdings. Brad Briner, director of real assets for Willett, stated plainly in May 2013 that, “We are natural gas bulls. We think oil is well priced,” citing new drilling investments on the horizon.19
It’s not simply that Bloomberg is actively snapping up fossil fuel assets even as he funds reports warning that climate change makes for “risky business.” It’s that those gas assets may well have increased in value as a result of Bloomberg’s environmental giving, what with EDF championing natural gas as a replacement for coal and the Sierra Club spending tens of millions of Bloomberg’s dollars shutting down coal plants. Was funding the war on coal at least partially about boosting the share price of gas? Or was that just a bonus? Perhaps there is no connection between his philanthropic priorities and his decision to entrust so much of his fortune to the oil and gas sector. But these investment choices do raise uncomfortable questions about Bloomberg’s status as a climate hero, as well as his 2014 appointment as a United Nations special envoy for cities and climate change (questions Bloomberg has not answered despite repeated requests). At the very least, they demonstrate that seeing the risks climate change poses to financial markets in the long term may not be enough to curtail the temptation to profit from planet destabilization in the short-term.20
Bill Gates has a similar firewall between mouth and money. Though he professes great concern about climate change, the Gates Foundation had at least $1.2 billion invested in just two oil giants, BP and ExxonMobil, as of December 2013, and those are only the beginning of his fossil fuel holdings.21
Gates’s approach to the climate crisis, meanwhile, shares a fair amount with Branson’s. When Gates had his climate change epiphany, he too immediately raced to the prospect of a silver-bullet techno-fix in the future, without pausing to consider viable—if economically challenging—responses in the here and now. In TED Talks, op-eds, interviews, and in his much-discussed annual letters, Gates repeats his call for governments to massively increase spending on research and development with the goal of uncovering “energy miracles.” By miracles, Gates means nuclear reactors that have yet to be invented (he is a major investor and chairman of nuclear start-up TerraPower); he means machines to suck carbon out of the atmosphere (he is also a primary investor in at least one such prototype); and he means direct climate manipulation (Gates has spent millions of his own money funding research into various schemes to block the sun, and his name is listed on several hurricane-suppression patents). At the same time, he has been dismissive of the potential of existing renewable technologies. “We focus too much on deployment of stuff that we have today,” Gates claims, writing off energy solutions like rooftop solar as “cute” and “noneconomic” (despite the fact that these cute technologies are already providing 25 percent of Germany’s electricity).22
The real difference between Gates and Branson is that Branson still has a hands-on leadership role at Virgin and Gates left the top job at Microsoft years ago. Which is why when Branson entered the climate fray, he was really in a category of his own—promising to turn a major multinational, one with fossil fuels at its center, into an engine for building the next economy. The only other figure who had raised similar hopes was the brash Texas oilman T. Boone Pickens. In 2008, he launched “The Pickens Plan,” which, backed by a huge advertising budget in print and television, promised to end U.S. dependence on foreign oil by massively boosting wind and solar, and converting vehicles to natural gas. “I’ve been an oil man my whole life,” Pickens said in his commercials, with his heavy Texas twang. “But this is one emergency we can’t drill our way out of.”23
The kind of policies and subsidies Pickens was advocating were ones from which the billionaire’s energy hedge fund, BP Capital, was poised to profit—but for the greens cheering him on, that wasn’t the point. Carl Pope, then heading the Sierra Club, joined the billionaire on his private Gulfstream jet to help him sell the plan to reporters. “To put it plainly, T. Boone Pickens is out to save America,” he pronounced.24
Or not. Shortly after Pickens’s announcement, the fracking frenzy took off, and suddenly powering the grid with unconventional natural gas looked a lot more appealing to BP Capital than relying on wind. Within a couple of years the Pickens Plan had radically changed. It now had almost nothing to do with renewable energy and everything to do with pushing for more gas extraction no matter the cost. “You’re stuck with hydrocarbons—come on, get real,” Pickens told a group of reporters in April 2011, while questioning the seriousness of human-caused global warming to boot. By 2012, he was extolling the virtues of the tar sands and the Keystone XL pipeline. As David Friedman, then research director for the Clean Vehicles Program at the Union of Concerned Scientists, put it: Pickens “kept saying that this wasn’t about private interests, it was about the nation and the world. But to dump the part that actually had the greatest potential to cut global warming and pollution and help create new jobs in the U.S., in favor of the piece that really does most benefit his bottom line, was a d
isappointment.”25
* * *
Which leaves us with Branson—his pledge, his prize, and his broader vision of voluntarily changing capitalism so that it is in keeping with the laws of “Gaia.” Almost a decade after Branson’s PowerPoint epiphany, it seems like a good time to check in on the “win-win” crusade. It’s too much to expect Branson to have changed the way business is done in less than a decade, of course. But given the hype, it does seem fair to examine how his attempts to prove that industry can lead us away from climate catastrophe without heavy government intervention have progressed. Because given the dismal track record of his fellow green billionaires on that front, it may be fair to conclude that if Branson can’t do it, no one can.
The Pledge That Turned into a “Gesture”
Let’s start with Branson’s “firm commitment” to spend $3 billion over a decade developing a miracle fuel. Despite press reports portraying the pledge as a gift, the original concept was more like straight-up vertical integration. And integration is Branson’s hallmark: the first Virgin business was record sales, but Branson built his global brand by making sure that he not only owned the music stores, but the studio where the bands recorded, and the record label that represented them. Now he was applying the same logic to his airlines. Why pay Shell and Exxon to power Virgin planes and trains when Virgin could invent its own transport fuel? If it worked, the gambit would not only turn Branson into an environmental hero but also make him a whole lot richer.