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Gore Warns on "Subprime Carbon" Industry
The Associated Press
Thursday 14 February 2008
United Nations - Al Gore advised Wall Street leaders and institutional investors
Thursday to ditch businesses too reliant on carbon-intensive energy - or prepare
for huge losses down the road.
"You need to really scrub your investment portfolios, because I guarantee
you - as my longtime good redneck friends in Tennessee say, I guarandamntee
you - that if you really take a fine-tooth comb and go through your portfolios,
many of you are going to find them chock-full of subprime carbon assets," the
former vice president said.
Carbon dioxide from burning fossil fuels is the leading component of "greenhouse
gases," which scientists say are playing a key role in warming the globe.
Gore's remarks before a high-profile business crowd that collectively controls
some $20 trillion in capital were intended to unleash a financial ripple effect
that could force the world to start putting a price on carbon emissions.
Gore, who shared the Nobel Peace Prize for his efforts to warn about climate
change, compared the financial risks facing investors in carbon-using industries
with the meltdown in the market for subprime mortgages given to people with
blemished credit records or low incomes.
"Similarly, the assumption that you can safely invest in assets that come
from business models that assume carbon is free is an assumption that is about
to go splat," he said. "You have lots of assets, many of you do, in your portfolios
right now that truly do deserve that epithet 'subprime."'
The U.N. played host to nearly 500 prominent financial leaders and institutional
investors who came searching for insights on shifting business currents as the
world shifts to cleaner energy sources and fuels.
Fifty U.S. and European institutional investors managing $1.75 trillion in
assets agreed to invest $10 billion more in energy efficiency and "clean energy"
technologies over the next two years and to aim for a 20 percent reduction in
energy from core real estate investment holdings over three years. California
State Treasurer Bill Lockyer said his state's leading pension funds would invest
more than $800 million in environmental technology with similar aims.
A report by the McKinsey Global Institute released at the U.N. conference said
major investments over the next decade in boosting the output from various types
of energy that consumers use could earn investors double-digit rates of return.
"As soon as people believe carbon has a price, it's going to have a price,"
said Vinod Khosla, a venture capitalist who was one of the co-founders of Sun
Microsystems.
Peter Darbee, chairman and CEO of PG&E Corp., an energy-based company in
San Francisco, said cleaner-burning utilities should be rewarded and "those
that burn coal should have to pay for clean energy."
The conference, which followed three days of debate in the U.N. General Assembly
on what to do about climate change, was organized by three groups that support
the United Nations - the U.N. Foundation, Ceres and the U.N. Fund for International
Partnerships.
Mindy Lubber, president of Ceres' investor coalition, called it the largest
meeting of financial leaders to focus on climate change.
At the last such meeting in 2005, participants pledged to invest $1 billion
in clean energy technologies and followed up by doing that in less than a year.
"The shift towards a greener future is still in its infancy and needs nurturing,"
U.N. Secretary-General Ban Ki-moon, who was in Washington, told participants
Thursday through a spokesperson. "While the world looks to the U.N. to steward
the negotiating process, the United Nations looks to you, as leaders in the
financial sector, to lead in innovating financing and technological development."
In December, U.N.-sponsored climate talks in Bali, Indonesia, produced a "Bali
Roadmap" for new negotiations intended to produce a global treaty on reducing
greenhouse gases. It would replace the Kyoto Protocol, which covers just 37
industrial nations and expires in 2012.
Timothy Wirth, president of the U.N. Foundation, called the drive to adopt
new energy sources "as important as the computer revolution in generating new
wealth and jobs."
One longtime champion of such a shift calls it a total makeover of the $6 trillion
world energy economy. Fred Krupp, president of Environmental Defense, argues
in his upcoming book, "Earth: The Sequel," that the search for a technological
fix to global warming will produce new industries, jobs and private fortunes.
Krupp's group has worked with General Motors Corp., DuPont Co. and other companies
in calling for U.S. limits on greenhouse gases to combat global warming.
"There'll be a whole cascade of private capital flowing to remaking the energy
infrastructure of our world, because it's a multitrillion-dollar business,"
Krupp told The Associated Press. "Increasingly, you're seeing this point of
view not only in America, but with politicians in other countries as well."
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On the Net
U.N. Foundation: http://www.unfoundation.org
Ceres: http://www.ceres.org
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