Lawrence Solomon: Carbon Baron Gore

Lawrence Solomon: Carbon Baron Gore

By Lawrence Solomon
Financial Post, August 26, 2009

Who will be the Robber Barons of the 21st century?Al Gore is poised to become the first climate billionaire

At the turn of the 20th century, a period famous for its Robber Barons, John D. Rockefeller was making his fortune in oil, Andrew Carnegie in steel, Cornelius Vanderbilt in railroads and J.P Morgan in finance. Many predict that the history books of the future, when listing the legendary fortunes made at the turn of the 21st century, will place Al Gore at the top of the list, as the first great Carbon Baron.

In 2000, when Al Gore lost his bid to become president of the United States, he had less than US$2-million in assets. Neither was Gore known for his financial acumen — annual White House disclosures of his and Tipper Gore’s joint tax filings showed little income beyond the $175,000 he earned as vice-president.

To the contrary, Gore was a laughing stock in investment circles for his lack of financial sophistication, which, the press said, explained why Gore’s net worth had been declining during the booming 1990s. Gore had failed to understand the significance of the new Internet economy that had so transformed the world.Instead “most of his money was in checking and passbook accounts or tied up in property,” The New York Times reported, in an article entitled “Gore Has Not Bought Stocks for Decades.” In an article entitled “Gore flunks investor test,” Dow Jones’ SmartMoney.Com mocked Gore for being irrationally risk averse, saying, “Al Gore’s assets look more like 1899 than 1999. As things stand, the vice-president is without anything with a P/E, let alone an IPO: no stocks, no funds, not even a bond. What does he have? Land — as far as the eye can see. Oh, and a zinc mine he’s leasing out to an Australian mining company.” Fortune magazine went so far as to headline a 1998 story, “The Vice President’s Financial Acumen ‘Ain’t Worth a Bucket of Warm Spit’” Its verdict: “This is a family in dire need of a money manager.”

Nobody doubts Gore’s financial acumen now. Within eight years of leaving politics, Gore had reportedly become worth well in excess of US$100-million. Many expect him to become a billionaire through his stakes in a global warming hedge fund, a carbon-offset business, a renewable energy investment business and other global warming related ventures. He is now money manager to institutional investors and the super rich through Generation Investment Management, a firm that he co-founded in 2004.

Neither does anyone anywhere any longer regard Gore as a timid investor, bereft of ambition. His goal for Generation Investment Management, as he described in 2008 to Fortune magazine, is to help drive a societal transformation that will be “bigger than the Industrial Revolution and significantly faster.”

The Fortune interview explained his firm’s intention to help orchestrate “a makeover of the US$6-trillion global energy business,” from coal plants and the internal-combustion engine to petrochemicals and even bottled water. “What we are going to have to put in place is a combination of the Manhattan Project, the Apollo project and the Marshall Plan, and scale it globally,” Gore continued. “It’d be promising too much to say we can do it on our own, but we intend to do our part.”

Gore’s societal plan and his investment plan are indistinguishable and straightforward: He wants to make fossil fuels uncompetitive and renewable energy competitive by convincing governments to punishingly tax fossil-fuel technologies through mechanisms such as cap and trade. In the process, Gore intends to make money at every stage of this transformation — through his stake in the carbon trading markets being created, through his portfolio of renewable energy and other so-called clean-tech investments and by acting as a broker.

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