BUSINESS:

Branson's 'Carbon War Room' puts industry on front line of U.S. climate debate

Richard Branson, the British-born billionaire, equates global warming with the kind of threat posed by a world war. In a capitalist America, he argues, that means deploying private equity and ingenuity to beat a common enemy -- in this case, carbon emissions.

A serial entrepreneur, Branson has become as famous for the success of Virgin Records, Virgin Atlantic Airways and a flock of spinoff companies as for his stabs at addressing vexing environmental and public health issues. His ventures, including trips to outer space, have made him among the world's most famous capitalists, alongside Bill Gates and Warren Buffett.

His latest venture, the "Carbon War Room," is a nonprofit organization based less than a mile from the White House. It has been around for five months, but has kept a low profile as it sells to venture capitalists, private equity investors and U.S. industrial giants the idea that cutting greenhouse gas emissions can drive long- and short-term profits and is good for the U.S. economy.

If businesses and governments fail to address global warming, Branson said in an interview yesterday, the problems could outstrip the damage done during World Wars I and II. "I thought, if that's the case, where is the war room, where is the center that's coordinating the attack on carbon?"

Cargo shipping, airlines, cities and housing are some of the low-hanging fruit, said Branson and Carbon War Room staff as they described partnerships with companies including Maersk, the global tanker operator, to cut some of the noxious pollutants and carbon dioxide emissions that come with shipping goods across the ocean.

A critical point in the debate

Branson has entered the fray at a critical point in the U.S. climate debate. The debate in the United States has grown more strident since the House passed its hotly contested cap-and-trade bill and as climate change skeptics have won traction on Capitol Hill and in the public eye.

Democratic leaders in the Senate and the Obama administration are gearing up to push financial regulatory reform toward a quick vote, getting off their plate the only big-ticket issue, aside from filling Justice John Paul Stevens' seat on the Supreme Court, standing in the way of a debate about energy and climate policy. On Monday, Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joseph Lieberman (I-Conn.) are planning to unveil a long-anticipated legislative proposal designed to attract support across the political spectrum and pass in the Senate.

The three senators have met repeatedly behind closed doors with business leaders in recent months, and have made it clear that the political coalition needed for passage includes the amorphous business community. The White House has kept close ties with influential electric utility executives inclined to support a carefully crafted cap on emissions; General Electric Co., the major U.S. maker of gas turbines, windmills and appliances; and venture capitalists who see "green" business opportunities as every bit the driver of U.S. innovation and big financial deals as the Internet during the 1990s.

"The government can't make things happen on its own," said Rebecca Blank, undersecretary for economic affairs at the Department of Commerce. "If the private sector doesn't believe in this, public-sector efforts won't be effective."

In a pair of reports issued yesterday, the Commerce Department tried to bang home the idea that the U.S. government, from this point on, is measuring the output of industrial greenhouse gas emissions. The roughly $500 billion green economy "is poised for growth," the department concluded. Between 1.8 million and 2.4 million green jobs counted by Commerce are primarily in the areas of energy conservation, resource conservation and pollution control. Manufacturing accounted for about 200,000 jobs.

Commerce also said that manufacturers have become more carbon dioxide-efficient, and households account for 30 percent of energy-related emissions.

U.S. competitiveness is at stake?

Ardent clean-energy venture capitalists pressing the U.S. government to adopt mandatory carbon controls, with the idea that doing so opens the door to a lucrative technology boom, have been making their case quietly. Last summer, ahead of the House climate debate, groups for and against legislation spent millions of dollars on the newspaper and television advertising.

Daylong events yesterday and today sponsored by the Carbon War Room, including speeches by Branson, were closed to all but a few reporters. Branson was scheduled to meet with Commerce Secretary Gary Locke and U.S. EPA chief Lisa Jackson last evening. Today, there could be a trip to the White House, Branson and others said.

Top executives at Intel, Microsoft and Oracle signed a letter along with John Doerr, the venture capitalist, and the chief executives of Tesla Motors and Solazyme to urge members of Congress to continue to support Department of Energy funding for high-risk clean energy projects. Nothing less than U.S. national security and global competitiveness are at stake, they assert.

For the people involved in Branson's Carbon War Room, the bigger the company or city they can reach, the greater the impact.

Branson's bigger-than-life personality so far has attracted at least one significant private-equity investor, the founder of Pegasus Capital Advisors, Craig Cogut, who co-founded of the Carbon War Room after Branson pitched the idea about a year ago.

Cogut points to Waste Management and Wal-Mart as examples of companies that came around to seeing sustainable development as a profit-making enterprise. "Wal-Mart is the single biggest force for change in this area," he said. "Does the Carbon War Room have to wake them up? No, but there are many others we can help wake up."

Looking for energy efficiency partnerships

Branson also attracted Jigar Shah, who in 2003 created SunEdison, which he has since sold and remains among the largest U.S.-based solar power developers and financiers.

Shah said the group started out asking what has been done already. "We realized that over 50 percent of carbon emissions globally have profitable technologies that exist today that can offset the offending technology," he said. "So the question is, what the hell are people waiting for?"

Too much of that technology remains inaccessible. "Market failures are in the way," he said. "We are certainly a pro-capitalist organization, but capitalism doesn't work efficiently in every single sector."

Later this month or early next month, Shah and his staff will announce energy efficiency partnerships with a handful of cities around the world. In shipping, the organization first approached the most willing big tanker companies, particularly Maersk, to coordinate on an effort to measure shippers' emissions and potential reductions. The selling point is to their customers, who want lower shipping and fuel costs. "These shippers expect to get a competitive advantage if they have a more efficient ship and people know about it," said Shah.

Branson and Shah said the gap in public discourse and in private-sector efforts to address global warming is an oversized emphasis on policy-based solutions instead of direct engagement with companies.

For Branson, the public's uncertainly about science of global warming shouldn't be a significant factor. He says the goals remain the same. "To get out the message that dwindling resources is a fact of life," he said, "that reliance on foreign energy is not a good idea, and, in any event, energy is running short, particularly oil, rapidly, and we need to come up with other answers."