Branson: Behind the Mask (27 page)

Strident members of Congress had given climate change traction on Capitol Hill. Politicians spoke about a ‘$500 billion green economy’ employing over two million people in conservation, pollution control and other green jobs. Banks and businessmen were inventing funds to attract ethical investors in clean energy. Association with the environment had become the topic of big advertising campaigns among those hunting for green profits.

On 21 April 2010, Branson met Gary Locke, the commerce secretary, and Lisa Jackson, the director of the Environmental Protection Agency (EPA). Later that same day, he visited the White House. In both meetings, Branson urged the administration
to support renewable fuels. Soon after, Lloyd Ritter of Green Capitol, Gevo’s lobbyist, persuaded the US Navy to test Gevo’s bio-jet fuel in its planes. The US Air Force followed, buying 11,000 gallons of alcohol-to-jet fuel costing $59 a gallon, compared to conventional aviation fuel at about $3 a gallon. Neither renewable fuel had yet been manufactured. The following year, Obama announced a $510 million purchase of biofuels for aviation. His target matched the Air Force’s commitment to use biofuels for half their consumption in 2016. To manufacture the fuel, five million hectares of land would be converted to grow switch grass. Virgin’s apparently astute investment was confirmed in the first court battle brought by Butamax against Gevo for allegedly infringing its patent. The judge accepted Gevo’s argument that its own expertise was superior to Butamax’s. The defeat was dismissed by Butamax as irrelevant because the judge was untrained in patent law and science, and the company appealed to a specialist court.
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Branson was thrilled. His personal relationship with Obama had helped, despite him asking the president during a visit to the White House ‘if I could have a spliff, but they didn’t have any’. Although Branson was accused by a newspaper columnist of being racist because he would not have asked George W. Bush for cannabis, and was criticised for boasting about the exchange afterwards to journalists, his proximity to Obama reconfirmed the fulfilment of his American ambitions.

Certain of success with biofuels, he next attached his reputation to LanzaTech of New Zealand. The company promised to produce fuel from the recycled carbon gases emitted during the production of steel. ‘Recycling at its best,’ said Branson. ‘One day all planes could operate on this fuel.’ Naturally, he predicted success: ‘This new technology is scalable, sustainable and can
be produced at a cost comparable to conventional jet fuel.’ His timetable was precise. A demonstration flight using LanzaTech’s fuel was planned with Boeing, said Virgin’s publicists, within twelve to eighteen months – during 2013. Virgin Atlantic, said Branson, would use the new fuel to fly from Heathrow to Shanghai and Delhi within two years of that test flight. ‘Soon’, he said, LanzaTech’s process would be delivering fifteen billion gallons of jet fuel every year.

The company’s prospects were hampered by a lack of finance. Virgin refused to invest, but Branson introduced Khosla. The venture capitalist bought a 51 per cent stake for an estimated $40 million, and with Khosla’s help LanzaTech received a $3 million grant from the US government in 2011. Days later, Dr Jennifer Holmgren, LanzaTech’s chief executive, announced in London, with Branson standing beside her, that the company would ‘produce fuel for commercial use by 2014’. The publicity around the development of ‘green’ jet fuel was used by Virgin Green to rescue its second fund, which promoted especially the production of aviation fuel from algae. Emma Harvey, Virgin Atlantic’s head of sustainability, told Tim Rice of ActionAid that Branson anticipated good results. The fund collected $220 million, slightly short of its $300 million target, but sufficient to reassure Branson in his conviction that green investments would realise a new fortune. Unmentioned in the splurge of good news was the decision by Virgin Trains and Virgin Atlantic to abandon Branson’s plan to use butanol.

Then came more bad news. Ninety per cent of Branson’s investment in Cilion, Khosla’s first venture, was lost. Even worse, in 2011 Gevo’s losses were £31 million on a turnover of £41.7 million. Range Fuels in Georgia, another Khosla venture that produced ethanol from woodchips, became insolvent, despite receiving a $76 million government grant. Local officials were accused of failing to conduct proper due diligence of Khosla’s
proposals and criticised for overruling those who opposed the grant. The argument escalated after Khosla bought the factory back from the administrator for $5.1 million. By 2012, his energy projects across America had accepted about $600 million of public money, yet none had produced sufficient quantities of renewable fuel. Riding with Khosla was proving to be bumpy.

Virgin Green’s other loss-makers included Solyndra, a manufacturer of solar panels. The original attraction in 2008 had been its use of a substitute for silicon, whose price had rocketed. Twelve months later, silicon prices collapsed, and Chinese manufacturers were able to offer superior silicon panels costing $0.85 per watt of electricity compared to Solyndra’s panels at $6.29 per watt. Despite President Obama’s visit to the factory in May 2010 to promote the investment, Solyndra was declared bankrupt in September 2011. The government lost $535 million and private investors, including Virgin, more than $500 million.

Over the previous forty years, Branson had tilted the risk of investments in his favour. Virgin’s Green Fund was the exception. Unusually, he had allowed Khosla to influence his commercial judgement. Travis Bradford, the former deputy director of the Carbon War Room, had become a critic: ‘Khosla’s in it for the buck and his stories are not impartial. He’s not always successful.’ Virgin’s strategy, Bradford observed, ‘is too traditional. It’s all done badly. Venture capitalism doesn’t work in these areas.’ Khosla, meanwhile, was unrepentant about his losses. ‘My willingness to fail is what gives me the ability to succeed,’ he repeated, echoing Branson’s excuse. Failure was paraded as success because genuine success was remaining elusive.

In April 2012, Khosla announced that Gevo’s plant in Luverne, Minnesota, had been converted to produce butanol and would start production – ahead of Butamax. Gevo also announced talks with Coca-Cola to manufacture plastic bottles from butanol. Since Coca-Cola sold 1.7 billion drinks a day, Gevo’s
potential income was enormous. But the glory was short-lived. Five months later, Gevo’s engineers abandoned the start of production and closed the Luverne plant, and the director of technology departed. Gevo’s share price, reported analysts, was ‘in the toilet’.
Bankruptcy
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an investors’ tip sheet, recommended, ‘Sell Gevo Now’. Contrary to Branson’s prediction of profits and glory, the company was burning cash to fight Butamax’s legal action. By contrast, Butamax was on course to start producing butanol in America in 2014. Branson’s reliance on Khosla had once again proved to be disappointing. By December 2012, Khosla’s second investment fund had lost two-thirds of its peak value. ‘In the end, success is never assured,’ he wrote.

Khosla’s prophecy about a scarcity of energy was also wrong. The rate at which new oil reserves were being discovered was rising, while demand for petrol in the States was falling. Fracking had slashed natural-gas prices, and US government subsidies for biofuels were threatened by a drought. Prices of food and crops were rising, and poultry and livestock farmers had become vocal critics of the government’s policies. The profits of ethanol producers fell. Friends of the Earth also turned against Branson. ‘Most aviation biofuels’, their study asserted, ‘contribute more to climate change than conventional jet fuel. Biofuels are causing land grabs, increased food prices, deforestation, biodiversity loss and human rights abuses … Biofuels are a false solution.’ The aviation biofuels most condemned were those manufactured from palm oil and algae, both championed by Branson. Huge forests in Indonesia were being burned so that the land could be used for growing palms; paradoxically, in
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Branson lamented the destruction of the Amazon rainforest and urged, ‘This must be discouraged.’ He hated admitting mistakes. He had relied on assurances that biofuels would be developed rapidly, but apparently had not understood the science or the costs.

‘The numbers are not turning,’ Branson was told about his green investments in 2012. ‘There are no profits. Emissions are coming down because of the recession, not because of environmentalists.’ Branson had invested his own money and lost, but he did not retreat from a movement which provided invitations to shine. In 2011, Bulova named him a ‘brand ambassador’ for its Accutron watch, with the citation: ‘an entrepreneur, humanitarian and pioneer who reflects the spirit of innovation’. Recognition secured continuing membership of an elite club. Mixing with the world’s power brokers, Branson was presented as a global star whose presence at any conference was valuable, albeit expensive.

Roberto Vámos, the Brazilian organiser of the Global Sustainability Forum, was one of many inviting Branson to speak about the environment. In May 2011, the forum was holding its second conference at the Hotel Tropical in Manaus, near Brazil’s Amazon jungle, and Vámos invited Branson to join other star guests, including Bill Clinton, James Cameron and Arnold Schwarzenegger. Over 700 of Brazil’s leading businessmen, politicians and power brokers had paid a notional $ 15,000 per person to hear Branson explain how business could profit by improving the environment. Vámos agreed the standard $250,000 fee for Branson’s speech, which was entitled ‘Entrepreneurial Strategies for Decarbonising the Economy’.

Branson arrived on his private jet, as seminars about reducing the consumption of materials, managing waste and using local food were under way. He followed Clinton and Schwarzenegger on to the same stage. Both had been rewarded with standing ovations for their excellent speeches, but as Vámos watched Branson approach the podium he became perplexed. Branson was not carrying any notes and, to Vámos’s surprise, announced that he would not make a speech. ‘I’ll take questions,’ he told his bewildered audience. Vámos was furious. ‘Branson was a
disappointment,’ he said. ‘He was vague and general and poor. He was not worth the large fee I paid him.’ After muted applause, Branson headed back to the airport, refusing to stay for a ceremony in which the hall’s lights would be turned off for one hour to draw attention to global warming. Feeling bruised by Branson’s conduct was not unusual but, like others before him, Vámos did not protest because it reflected badly upon himself.

Branson had no difficulty receiving similarly large fees to address other conferences. He spoke around the world about his campaigns to save the cod and the tiger and about his recent venture with Bo Derek to protect polar bears – ‘which could be extinct within thirty years’ – in northern Ontario. He spoke about Virgin Atlantic’s commitment to using renewable fuels in ‘the near future’ and about Virgin Oceanic’s programme to protect the sea. He predicted Virgin Oceanic was certain to overtake and then beat James Cameron down to the Mariana Trench. ‘We’re not far behind,’ Branson had told journalists, ignoring Chris Welsh’s warning that ‘We’re years away from making the trip.’ When Cameron finally won the race, Branson was as optimistic as ever and announced that he would dive to the Puerto Rico Trench, 30,000 feet under the Atlantic, ‘this year’ – meaning 2012. One year after his deadline, and with Virgin’s continued support, Welsh was still waiting for the submarine’s dome to be built so that he could start tests before heading for the seabed.

Those mistaken predictions and disappointing speeches never dented Branson’s popularity. His celebrity erased any criticism, his magnetism corrected any deviation from his continuing upwards trajectory, and crowds waited to catch a glimpse of an icon. At a party in a Jamaican restaurant in New York, the guests – including Ben Cohen of Ben &
Jerry’s – waited one and a half hours for the star’s arrival and voiced no irritation about his brief appearance before he flew back to Necker. Regardless of his empire’s lacklustre financial performance, his
popularity reinforced his sense of uniqueness, confirmed by his life on Necker and his accumulation of other sanctuaries across the globe.

In 2003, he had bought Makepeace, a twenty-five-acre island off Australia’s eastern coast, for a reported A$5 million with Virgin Blue founder Brett Godfrey. First, he said it was for Virgin’s staff; then, later, for eco-tourism. Eventually, it was advertised for hire at $8,000 a night. Next, he bought Mosquito Island, near Necker, in order to develop it immediately as ‘a showcase for sustainability and eco-living’. Instead, Mosquito remained ‘very much in the planning and development stages’, as it was described by the Virgin Elite resort group. Then, he bought the Panchoran Retreat in Nyuh Kuning, Bali. Also known as the Linda Garland Estate, it comprised seven villas and a swimming pool over twenty-five acres. To add to the collection, he was ‘delighted to announce’ that he would be protecting one million wildebeest in Kenya by constructing Mahali Mzuri, ‘a new safari camp that will help to protect the Great Migration’. Branson wrote that the Kenyan Tourism Federation had asked him to buy the land to prevent local farmers building fences for their cattle, which harmed the wildebeest. The farmers, said Branson, would be employed to work at Mahali Mzuri for higher rates: ‘My solution is a win–win for everybody.’ Not all the local Kenyans shared his enthusiasm. The farmers were nomads who, unlike Branson, would be unable to obtain a licence to build on a migration route through a protected national reserve.

In-between, he also bought the lease to a sprawling 491-acre estate in Peapack-Gladstone, New Jersey. Previously owned by King Hassan of Morocco, Natirar is a surreal mansion located on a steep hill that has been described as an ‘epicurean oasis’. Together with Bob Wojtowicz, a local property developer, he opened a club which would offer guests a restaurant, a cooking school, a wine school, a spa and a farm. Membership cost
$37, 500 and the annual fees were $4,800. In 2010, the hotel hosted a charity masked ball for the Susan G. Komen for the Cure Foundation. Branson was billed as the star attraction. On the evening, the hotel’s rooms were almost empty and Branson was reported to be in Necker hosting a pre-Halloween party for a group of models. Three years later, the development was still uncompleted and Virgin was no longer associated with the project.