Peter Fusaro

Source: Exec Digital Canada

Date :6/16/2008 1:58:36 AM

Peter Fusaro is Chairman of Global Change Associates, bestselling author of What Went Wrong at Enron and a thought-leader in the energy and environmental industry. Exec catches up with this man on the move

Written by John O’ Hanlon

It isn’t often I get to interview a thought-leader, but it’s hard to think of another way to describe Peter Fusaro. He does have companies of his own, and he sits on the boards of no fewer than seven clean-tech start-ups, because he is happy to guide green entrepreneurs. However he is no kind of corporate man or wealth creator - not that he doesn’t understand these people’s language.

As a founder of the Energy Hedge Fund Center and creator of the annual Wall Street Green Trading Summit, he is the person that the corporate finance people, energy companies and investment banks come to when they want to learn how carbon trading works. Even the government does. On June 12, Peter will be addressing staff from both Houses of Congress on ‘cap and trade’, “because they need to understand what this means. I do all my government work for free so there is no conflict of interest. I am not any kind of lobbyist – it is just the right thing to do. I am also an advisor to other foreign governments.”

Earth Day awakening

Fusaro says his personal awakening to the centrality of energy policy coincided with the birth of the modern environmental movement on April 22 1970. “I was at Earth Day with my Solar Power T-shirt, and aiming to make the world a better place. As for many other people, that was the great teach-in that raised my awareness.”

He continued his education, specializing in international relations and political science. Then in 1975, after graduate school, he joined the public service with the Federal Energy Administration (now the Department of Energy). “My boss said, ‘We are going to have gasoline shortages: go work with EPA (the US Environmental Protection Agency) on taking the lead out of gasoline.’ That is how it all got started!”

“I don’t know whether it is a blessing or a curse, but my entire career has been in energy and environment, and I have been involved at an early stage all these things, so lead phase-down turned into LNG safety and environmental impact in 1978. I am a New Yorker; I worked with New York City on the first demand side management, now called demand response and energy efficiency programs. Then I worked at the World Trade Center and port authority facilities in the early 90s, and worked with Toyota on the Prius in 1997-98.”

He takes a scattergun approach when talking about his experience, because he is interested in the issues and career progression has clearly not been important. The only really long term item on his CV is his association with Global Change Associates - consulting firm or think tank, however you’d like to describe it - that he founded in 1991 and now chairs. GCA’s focus is on “recognizing opportunities in both sustainable energy and environmental projects for hedge funds, venture capital in clean technology, family office, investment banks and selected energy companies.” It was the first company to publish energy industry reports on Enron in 2001, energy e-commerce in 1999 and on energy hedge funds in 2004.

High tech, high touch

Fusaro has 13 books to his credit on energy and environmental trading and risk management, one of which, What Went Wrong at Enron was a New York Times best-seller when it was published in 1992. “I am a lousy typist, but I’m very fast,” he says, claiming to be able to produce articles at 1,000 words in half an hour.

GCA says it believes in ‘high tech, high touch’, which couples the capabilities of the Internet with the importance of human personal contact. And that comes straight from its founder, who took to the internet like a duck to water. “I was an early adopter of the internet, with a presence since 1986. I had a laptop in 1989. All I need to put on a seminar is a website and a physical space, and I can organize the whole thing very rapidly. By mailing it out to the 150,000 addresses on my database, I can get traction really quickly.”

Fusaro is an archetypal New Yorker, if there is such an animal. He is proud of the restless energy of New York City. His next project, he says will be to set up a Greenathon with his wife, a singing instructor at the Julliard School, because he really believes you have to bring in humor and all of the arts into any discussion of climate change. “We will bring musicians to play, and I am bringing in a green architect to talk about the non-green buildings. In New York there are nine green buildings and 900,000 buildings in the retrofit market. Have some fun, I say, don’t get depressed! I am a big optimist about all this stuff.”

Nonetheless, he does want to see some movement in what he calls the glacial rate of change. He is doing his best by traveling all round the world – London and Amsterdam this month to talk to clean-tech entrepreneurs, Zurich to give a class in green finance, then back to New York for about a week, then back to Montreux, Switzerland at the beginning of June. But one man can only do so much to catalyze the emergence of a global carbon market so that we can begin to trade ourselves out of the mess we are in.

Heavy lifting

“The underinvestment in clean energy and clean technology is mind boggling, when you consider the market opportunity,” says Fusaro, referring in large part to the energy companies themselves. The global energy industry is awash with capital yet seems stuck with a policy of stock repurchasing and dividend boosting. “Not a very enlightened approach to the future.” No wonder he spends so much time with entrepreneurs and private investors who do see the potential of clean-tech. He understands why the oil and gas majors, governments and large institutional investors don’t get involved in a market they consider under-researched, but it is time now for what he calls ‘heavy lifting’, that is, serious investment in alternative energy.

He said he was an optimist. The investment will have to be made, he says. “I have learned a few things along the way. Firstly, not everyone is an altruist, so how are you going to incent people to do the right thing? Well, I learned this template called ‘trading’ from Goldman Sachs and Morgan Stanley, and I applied that to environmental financial markets! I have been a very vociferous advocate of ‘green trading’ for the last seven years. It involves renewables, energy efficiency, as well as carbon emissions reduction, and to be frank I am doing a job most people wouldn’t want. I have lost count of the number of articles I have written and presentations I have done. The bottom line is that people now need leadership.”

So he’s out there in the universities (he is on the board of the University of Michigan’s Erb Institute, which has 75 students doing a three year MBA degree in sustainable finance), and wants to get into schools through the Global Change Foundation, to be launched this fall. “It will give people free access to educational tools to understand clean-tech, green finance, green trading. My mantra is ‘education breeds market liquidity!’” Meanwhile, anyone can get the tools to assess and recue their own carbon impact at The Carbon Footprint Exchange, which he founded just one month ago.

The Holy Grail

Fusaro’s goal may be visionary, but don’t we all share it? It’s not about saving the planet – the planet is going to be fine. It’s the human race we should worry about. So Fusaro has a job to do and he is very clear what it is.

“Very simply my game is accelerating markets. We are all in this global crisis together; a metric ton of carbon reduced anywhere in the world benefits everybody – frankly, a lot of bureaucrats don’t understand that.”

It’s just a matter of realizing that carbon is a commodity like any other. Creating a global carbon market will soon stimulate the heavy lifting investment he wants: the money is there, he points out. But in the United States and Europe combined, investment in clean-tech during 2007, including energy reduction, energy storage, transportation, energy efficiency, recycling and waste reduction, was just $5.18 billion. “That’s up from $3.6 billion in 2006, but it’s still far short of the investment needed to move the US economy, let along the global economy, on to a cleaner and greener economic path.”

Once the US government fully commits to carbon reduction on a global scale and Wall Street starts to see investment returns over five times the capital invested, the market will scale on its own. It just hasn’t happened yet. “The entrepreneurs and the dreamers are out there in the hinterlands creating the next economic cycle, and it’s not a bubble,” says Fusaro. “Higher sustained energy prices, more rapid technology shift and a price for carbon will materialize in tangible projects for today, and next generation technologies for tomorrow. This is the Holy Grail of sustainability – building a sustainable future backed by sustainable returns.”

Click here to read the full interview with Peter Fusaro