Top fund manager quits to set up 'greentech' group
Friday 25 April 2008
Using wood to create biofuels, rather than corn and sugar, could be the way to wean the world off oil without triggering a surge in the price of basic foodstuffs, according to one of the world's most powerful pension fund managers.
The idea is being pursued by Russell Read, chief investment officer of the California Public Employees' Retirement System (Calpers), who has surprised his fellow fund managers by resigning to set up a new investment company that will put money into green technology ventures.
The growing demand for biofuels is one factor in the soaring price of commodities, which has sparked food riots and protectionism this year. But Mr Russell says new technologies hold the key to solving the world's energy needs and to protecting the environment – if only investment is channelled quickly to the most promising projects.
"We could find new sources of energy without causing the same crises that we are seeing at the moment," he said. "What is missing is investment vehicles that can identify and develop and scale up the most compelling opportunities that are being developed by research institutions and other private sector initiatives."
Mr Read, 44, has been overseeing the $244bn (£124bn) investment portfolio at Calpers for under two years, during which time he pushed for more money to be allocated to commodities and to alternative investments, such as venture capital funds invested in green technology.
He has also redoubled Calpers' efforts to encourage corporate action on climate change, and the fund is a regular sponsor of shareholder motions aimed at pressuring companies to adopt environmentally friendly policies.
Simultaneously, Mr Read has kept up his decade-long private interest in forestry and has served as the socio-economic adviser for the Forest BioProducts Research Project at the University of Maine. He also runs the financing for Maine's Fractionation Development Centre, which is dedicated to the transformation of wood into energy and building materials currently provided by crude oil.
On his departure from Calpers, scheduled for the end of June, Mr Read will set up an investment company dedicated to supporting "transformative" green technologies. "I love the impact I've had at Calpers, but I believe I can play a leading and beneficial role to galvanise the efforts of leading scientists, technologists, investors and policymakers in my new role," he said.
Interest in, and funding for, clean fuel and green technology projects has soared, and Mr Read explained this was one of the reasons he was quitting Calpers after such a short stint in charge.
Venture capital investment in green-tech hit $5.2bn in North America and Europe last year, rising from $3.6bn in 2006, according to the industry organisation, the Cleantech Group.
Energy generation was the most active sector last year, with 172 investments totalling $2.75bn, and the group said a rising number of deals over $100m signalled growing investor confidence in the sector.
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