Goldman sets $40 billion clean energy investment plan
Wed, May 23 2012
By Lauren Tara LaCapra
(Reuters) - Goldman Sachs Group Inc plans to channel investments
totaling $40 billion over the next decade into renewable energy
projects, an area the investment bank called one of the biggest profit
opportunities since its economists got excited about emerging markets in
Goldman executives said this week that demand for alternative energy
sources will grow with global energy demand, and as big manufacturing
countries, including China and Brazil, set more aggressive targets for
reducing emissions. The bank plans to finance deals with clients' money
and, to a lesser extent, its own funds.
Goldman, which plans to announce the new target at its annual meeting on
Thursday, already invests in clean technology. In 2011, it helped
finance $4.8 billion in clean technology companies globally, and
co-invested more than $500 million in that area. The new target would
average out to $4 billion a year, leading some analysts to minimize the
target as more of a "charm offensive" than a new initiative.
In 2005, Goldman pledged to invest and finance $1 billion of
environmentally friendly projects. By the end of 2011, the company had
exceeded its goal, arranging $24 billion worth of financing and
investing $4 billion into such projects, said Kyung-Ah Park, head of
environmental markets at Goldman.
The bank's new $40 billion target applies to investments and financings
for solar, wind, hydro, biofuels, biomass conversion, energy efficiency,
energy storage, green transportation, efficient materials, LED lighting
Goldman has also pledged to reduce its own net carbon emissions to zero
Stuart Bernstein, head of Goldman's clean technology and renewables
investment banking group, compared the opportunity to technology
investments in the 1990s or investing 10 years ago in fast-growing
countries like Brazil, Russia, India and China, for which Goldman
economist Jim O'Neill coined the term "BRIC" in 2001.
"This is another emerging opportunity we think will be quite large,"
Enthusiasm for renewables was high in 2006 and 2007 as oil prices
soared. But enthusiasm waned after the financial crisis cut energy
demand and cash-strapped governments reduced subsidies for alternative
The use of hydraulic fracturing technology to access abundant supplies
of natural gas in the United States and elsewhere has also undermined
alternative sources of energy.
"Obviously we recognize this is not the easiest of times in the clean
energy market but nevertheless the underlying thesis as to why cleaner
and more sustainable forms of energy need to scale up still holds true,"
Analysts and experts said Goldman may also be looking to score public
relations points for a relatively small investment.
The bank has been on a charm offensive in recent months, after a former
employee wrote a scathing opinion piece in the New York Times in March
accusing Goldman of ripping off clients regularly. That was the latest
in a series of blows the bank's image has suffered since the financial
"It's forcing a firm that had its roots in being private for a very long
time to have to go out there and defend itself," said Michael Carrazza,
a former Goldman banker who is now CEO of the private equity firm Solaia
Capital Advisors. Promoting these sorts of initiatives makes sense, to
show that the bank does some good, Carrazza added.
(Reporting By Lauren Tara LaCapra)
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