Sunday, 9 August 2009

Richard Branson - I’m in a dirty old business but I try

Airline chief Richard Branson wants to show that green goals can work, but does he live up to his ideals?

“No Thanks. I’ll take the train,” said Sir Richard Branson, turning down the offer of a limousine as he arrived at Shanghai airport. It was the best he could do after flying for 12 hours from London on a Virgin Atlantic jet to talk to Shanghai’s mayor about green business. But, even as an environmental gesture, it soon seemed futile.
As the Maglev train raced into China’s commercial capital at 250mph, it looked as if Branson was being catapulted to a Dickensian past. The city was so polluted he couldn’t see more than 100 yards. “It’s horrendous,” he said.
That’s the problem with being an entrepreneur with green pretensions. However much you profess to love the planet, the planet has a habit of catching you out. You want to help tackle global warming but — oh no — you run, or have stakes in, five airlines and operate trains that spew tonnes of carbon into the atmosphere. You want to sketch out a green vision, so you fly to the capital of 21st-century business but when you get there you find everything — the cars, streets, even the people — are flecked with smog.
However, Branson was undeterred. “We shouldn’t stop trying just because we have not yet put our own house 100% in order or because we think a challenge is too great to achieve,” he said.
Branson has built a billion-pound brand by overcoming big obstacles. Now, he is tackling his biggest challenge. He wants to prove that green business can be good for the planet and good for the bottom line. His mantra? Go Green. Do good. Get rich.
He is starting in the air. “Because I’m in one of the dirty businesses, I have all the more responsibility to do something,” he said. The Virgin boss, who is valued at £1.2 billion in The Sunday Times Rich List, has spent £100m buying stakes in clean-fuel companies in an effort to uncover an alchemy for today: turning the base metal of crops into the solid gold of clean fuel.
He started with coconut oil — flying a Boeing 747 from London to Amsterdam last year with one engine running on the stuff — but gave up when he realised there weren’t enough coconutsto fuel an airline. It didn’t help that a recent holiday in India was ruined by people trying to sell him coconuts everywhere he went. He moved on to ethanol but dumped that when it became clear that it freezes at 15,000ft.
Now, he thinks he has found the answer. “Isobutanol is wonderful,” he said. “It doesn’t absorb water, so you can pump it in the same way as petrol. And you can make it from anything. Sugar is good. What if all the sugar now turned into soft drinks were, instead, turned into clean fuel?”
He has sunk several million pounds into a California-based firm called Gevo that makes the fuel.
Branson’s aim is that in five years some or all of Virgin Atlantic’s planes will be running on isobutanol and that he will be selling it to rivals. “I’ll happily take [BA boss] Willie Walsh’s money,” he joked.
Virgin trains, which are already testing bio-diesel, will follow. The move would be good for the environment, but it would also be good for Virgin. “We spend more than £1 billion a year on fuel right now, so the more we can use our own, and the more we can sell to others, the better,” said Branson.
Many experts are sceptical, however, and say that it will take much longer than five years to make the fuel commercially viable. His detractors add that isobutanol relies on genetic modification technology, which is opposed by environmentalists.
Most of Branson’s green investments have so far come from a Virgin “green fund”, an independent private-equity outfit that backs clean technologies and has raised £150m.
He has also sponsored the creation of the Carbon War Room, a New York environmental ideas incubator, and funded several prizes designed to foster new green initiatives.
In spite of the beard and shaggy locks, Branson is an unlikely green. It’s not just that he runs planes and trains, supports the third runway at Heathrow and sponsors the environmentally-unfriendly sport of Formula One. He is better known for packaging pleasure — music, wine, travel — than doing good.
Al Gore is responsible for his conversion. In 2006 the former vice-president of America visited Branson’s house in west London a few months before the release of his film, An Inconvenient Truth, and delivered the film’s lecture personally. Branson was so alarmed that he became an immediate convert.
He pledged that any profits paid to the Virgin Group, his holding company, by his transport businesses, would go to help fund the development of alternative fuels. The figure would total £1.6 billion between 2006 and 2016, he predicted. Wired magazine this month reveals that, so far, thanks to the credit crunch, only £110m in profit has materialised.
The claim has given ammunition to Branson’s critics who say that he is guilty of making big announcements and then beating a muted retreat when nobody is looking.
Jeff Gazzard, of the Aviation Environment Federation pressure group, accuses Branson of “attempting to make passengers feel less guilty about flying and persuade regulators to allow the industry to carry on growing”. Oddly, Branson, who claims he has, in total, sunk almost £200m into green investments, agrees.
He believes that the challenges of the recession and the environmental crisis are a reason to grow more and faster. The challenge is to do it better, greener.
“Energy is the life-blood of everything we do. We need airlines, we need travel, we need growth. If you hold industry back, we will not, as a nation, have the resources to come up with the new clean-energy solutions we need. Business is the key to solving the financial and environmental crisis.”
He can even see the potential advantages of the soupy air he breathed in Shanghai, echoing the view of some scientists who argue that smog acts like a filter that keeps some of the sun’s rays from hitting the earth.
As he headed back to Shanghai airport, he said: “The curious thing is, if this city and the rest of China had not got this haze, the world would, in fact, heat up by about an extra two and a half degrees. So, let’s keep the haze until we can come up with a solution to global warming. Maybe we should put a little extra sulphur in our fuel to create more?”
Where Branson puts his cash
Sir Richard Branson has backed a number of green ventures and initiatives with a total investment of £187m.
Green fuel, where he has invested £100m.
Virgin Green Fund, a private-equity outfit where he has put in £70m out of the total of £150m.
Virgin Earth Challenge, a £15m prize to find commercially viable green technologies.
Carbon War Room, an environmental ideas incubator, where he has put in £2m.

Sir Richard Branson raises $400m in funds for renewable energy venture

By Mark Leftly
Sunday, 9 August 2009
Billionaire Richard Branson is set to defy the downturn by completing the $400m (£240m) fundraising for his energy venture in renewables within two months.
The Virgin Green Fund, based in London and San Francisco, will be one of the few private-equity style funds to raise its target amount this year when it reaches its final close in September.
The fund ploughs $5m-$100m into growing renewable energy sectors such as biomass and solar power in the US and western Europe. Several investments have already been made – last year, it led a $14.5m funding round in GreenRoad Technologies, a start-up that helps reduce car fuel usage.
Mr Branson is believed to have put $100m into the fund, with the remainder coming from institutional investors. The fund is seeking returns of up to 30 per cent.
The private equity adviser MVision is raising the fund, which is run by an 11-strong team. These include partners Evan Lovell, Shai Weiss, and Anup Jacob, who co-founded the fund.

Green labels to show foods’ eco-credentials

Isabel Oakeshott and Sarah Ewart

FOOD could soon be labelled to indicate whether it is environmentally friendly under plans being considered by the government.
Ministers are examining whether products ought to have symbols showing green credentials, as well as “traffic light” labels indicating how healthy the item is.
The scheme would help shoppers to decide whether to buy products, such as exotic fruits flown in from Asia or endangered fish.
Campaigners say many consumers want to use their buying power to encourage supermarkets to supply more environmentally friendly food but are confused about which products to choose.
Jim Fitzpatrick, the environment minister, said: “There is clear evidence that people care about this and want to make the right choices. Labelling is very important in this. One option would be to give shoppers more information on the packaging.”
The labelling system would take account of factors such as how far food has travelled “from farm to fork”, how it is packaged, whether chemicals and other pollutants were involved in making it and also animal welfare.
However, there are concerns that it could prove too difficult to measure so many elements to produce a single red, yellow or green label.
“This is a balancing act,” said Fitzpatrick. “The labelling has to be as simple and useful as possible for the consumer and not create extra packaging or cost the producer an arm and a leg.
“Whether something is environmentally friendly or not is complex. New Zealand lamb that has travelled halfway around the world to get here may not actually be as damaging as something produced in Britain using loads of chemicals and fertilisers.”
The labelling scheme, which will be unveiled tomorrow, will be considered as part of a wider public consultation on how Britain should protect and promote its own food supplies over the next two decades.
More than 20 “kitemark” schemes are in use in the UK, usually in the form of logos stamped on packaging, and more than 78,000 food producers are involved.
The schemes include Freedom Food, the RSPCA’s animal welfare label; Farm Assured British Beef & Lamb; and the red lion quality mark which is stamped on eggs.
There is already a system being developed to show the scale of carbon emissions linked to the production of certain foods.
Retailers fear consumers may become overwhelmed by information on packaging and warn that a simple labelling system showing environmental credentials could be unworkable.
Richard Dodd, of the British Retail Consortium, said: “Labelling isn’t a magic bullet for these sorts of objectives. There is already a mass of information on products and a lot of competing demands for more. There is a danger of actually confusing people rather than helping them make choices.”
Tomorrow’s report on the future of our food production comes amid fears that changing weather patterns and shifting world populations could have a dramatic effect on Britain’s food supply.

We’re not eco monsters, says embattled Aga chief

The debate about the cooker’s virtues has boiled over with its maker taking on the critics

Matthew Goodman
Environmentalists have turned their guns on an array of villains, from carrier bags and patio heaters to the gushing taps at Starbucks coffee shops. Now they have a more unlikely target — the Aga cooker, icon of middle-class homeliness.
George Monbiot, the campaigning writer, stoked up the attack by describing the cookers, which also provide hot water and heating, as environmentally unfriendly “monsters”. He claimed that they generate much higher levels of carbon dioxide than other appliances, they waste energy because they are always running and, perhaps oddly, he berated them because they last for many years.
His concerns were echoed by some green organisations, including the Energy Saving Trust, which argued that Agas are “inherently wasteful” because they produce heat constantly, warming a house “even when not required, specifically when there is no one in”.
The company has responded in only a low-key way since the criticism began early this year. Its chief executive, William McGrath, agreed to a debate with Monbiot and a transcript of their conversation was published in The Guardian newspaper. It did not read like a cosy fireside chat. At times the discussion became so prickly, the pair were reduced to simply contradicting each other.
McGrath continues to defend his company against the charges that Agas are bad for the environment, but is bemused by some of the accusations. “Monbiot clearly has a very distinctive approach; he had some prejudices,” is all he will say.
It is not an idle debate. The government has set a target that by 2016 all new homes must be carbon neutral. If Agas are seen to be carbon-belching monsters, that could be very bad for business.
The company has challenged the claim that Aga homes emit more carbon dioxide than those using other forms of heating. The average UK household produces about six tonnes of carbon dioxide a year. McGrath claims a home with a programmable Aga powered by gas or electricity, rather than the traditional solid fuel or oil, would produce a much more modest amount, say 3.5 to 4.5 tonnes annually. In part, the company argues, this is because the multi-purpose Aga removes the need to run other domestic appliances such as tumble dryers or toasters.
“We feel robust on our carbon-dioxide calculations,” said McGrath. “To some degree, it’s up to individuals how they operate their Aga at home.
“If we can make the products more programmable, that’s got to be a good thing. And people are looking for Agas to do more things for them [than merely heating the home or cooking].”
The most crucial element is the programmable aspect of the devices. Much of the company’s research and development has been focused on this area and most new electric Agas come with a timer switch that allows them to be turned off overnight, for example. There are, though, a huge number installed that lack such a device — the company estimates that 300,000 Agas are in use around the world.
Last month it started a campaign to raise awareness among Aga owners that it is possible to upgrade the cookers’ burner systems, fitting them with modern technology. In this way, gas-fired Agas can be made programmable, for example.
Such an upgrade does not come cheap, however. Adding a timer to an electric model costs £700, but to turn an oil-fired Aga into a programmable electric machine would set you back about £2,000.
It could be difficult to convince owners to fork out such sums for an upgrade during a recession. McGrath said that those who upgraded from oil to electric “would not need their Agas serviced as often” and would see a reduction of about 25% in energy consumption. He pointed out that Aga conversions were not new: “For people who have had their Aga for 30 or 40 years, this has happened before. Agas were built [originally] to take solid fuel and most of those were converted to run on oil or gas.”
The cast-iron cookers, made from 70% recycled material, are renowned for their endurance. This is one of the reasons that Monbiot became agitated by them. Agas “last indefinitely. That’s a disaster for an energy-using device, isn’t it?” he said, referring to the fact that they don’t get replaced by more economical products.
The Warwickshire company carried out a poll to find the oldest Aga in use in Britain. One had been in service since 1932. McGrath argues that to criticise the cookers for their longevity makes little sense. “The point we are trying to make is that we are moving with the times, moving with the technology,” he said.