Tuesday, October 13, 2009

George Soros to Invest $1 Billion in Green Energy

The upcoming climate talks in Copenhagen are less than two months away, and everyone is looking to throw in his/her two cents. On Oct. 10, it was billionaire George Soros’ turn to get in on the act. Giving a speech in Denmark, the man who famously ‘broke the Bank of England’ in the early 1990s now plans to invest $1 billion in clean energy technology. Another $100 million — doled out in $10 million increments annually over ten years — will fund the newly-created Climate Policy Initiative, a foundation targeted at environmental policy.

That’s a sizeable amount of cash, though Soros didn’t specify where the $1 billion would be spent other than saying ‘stringent conditions’ will be used to evaluate potential investments. And in an ironic twist, Soros, who made a sizeable chunk of his fortune through currency speculation, put his support behind carbon taxes, not cap-and-trade systems. His reason? Financial investors can too easily manipulate carbon markets.

Soros is wise to keep his cards close to his chest. With so much money on the table, potential deals could be given a ‘Soros premium’ if the billionaire focuses on a too-narrow clean energy brief. But some of his likes/dislikes are already known. Soros, for instance, has invested in clean coal technology, including Portsmouth (NH)-based Powerspan Corp that specializes in carbon capture technology.

Yet before we start speculating too much on where Soros will spend his cash, a word of caution is merited.

Other high-profile figures, such as T. Boone Pickens, have made similar promises of multi-million dollar investments. Often, though, their plans have come to nothing. That obviously doesn't mean Soros won't go ahead with his $1 billion scheme. But until concrete plans are announced, I'll reserve judgment. As Rod Tidwell (from Jerry Maguire fame) once said: 'show me the money.'

Indeed, the more important figure -- for me -- is $25.9 billion. That's the amount of money invested in green energy projects in the third quarter of 2009, according to New Energy Finance. After a shaky start to the year, investors are now more willing to fork out for clean energy projects. The gradual thawing of the credit markets certainly has helped. So have government-sponsored funds -- like renewable feed-in tariffs or other subsidies for green technologies -- that were included in global stimulus packages.

So with investment returning to the sector, maybe Soros has picked a good time to buy in. Other investors will keep a close eye where he puts his money.

(from businessweek.com, October 12, 2009)

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