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Man on a Mission: Billionaire Hedge-Fund Manager, Tom Steyer, on Why Californians Must Protect Their Landmark Energy Law at the Polls Next Week

Steyer is an unassuming, fist-pounding man of conviction who deftly defies the stereotype of ruthless financier. I sat down with him to debate the issues and hear his closing argument.
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Come Election Day, Golden State residents will decide the fate of AB 32, California's landmark climate and energy legislation. Prop. 23, backed by the politically vociferous Koch brothers, and Texas oil companies Valero and Tesoro, would indefinitely suspend implementation of the law, which aims to reduce greenhouse-gas pollution and establish the state as a worldwide leader in green technology. But not if Tom Steyer has his way.

By all appearances, Steyer, co-chairman of the campaign against Prop. 23 and founder of Farallon Capital Management, is an unassuming, fist-pounding man of conviction who deftly defies the stereotype of ruthless financier. He has poured millions of his own money into the battle, the results of which are likely to have consequences far beyond California given the absence of a clean-energy law at the national level.

I sat down with Steyer in his San Francisco offices on a recent Wednesday morning to debate the issues and hear his closing argument.

Your co-chairman for the campaign against Prop 23 is George Shultz, Secretary of State under President Reagan. This seems an unlikely alliance at a time when Democrats and Republicans can't seem to agree on anything. How did it come about?

George is a very smart guy and obviously a committed Republican. But he has a history of thinking that some issues are so important that they're not bipartisan -- they're nonpartisan. Both he and I agreed that this is an issue that is so important for California -- and for the United States -- that to be fighting it on partisan grounds is unacceptably selfish. Our coalition is a broad one. I'm hoping that it can be an example of how we can actually get things done at a time when extreme partisanship seems to have crippled us.

Let's turn to the economic debate. Proponents of Prop 23 say AB 32 is a job killer and suspending it until unemployment is reduced to less than 5.5 percent for four consecutive quarters is merely common sense. Your response?

First, they're being deceptive. They're saying that, "Oh, we just want to put in on hold for a little while." And really what they want to do is kill it because we're not going to get down to 5.5 percent unemployment for four consecutive quarters for a while. We're at 12.5 percent and we've only gotten to 5.5 percent three times in the last 30 years.

Second, the fastest growing job creator in this state is green energy. We are getting 60 percent of the nation's venture capital in green tech. That's up from 34 percent before AB 32 was passed. In most businesses, you end up with real concentrations of people and expertise and companies in one place. That's how information technology and aerospace worked. We're in a position to do that so this can be a huge driver and actually be the thing that pulls us out of this recession.

But although clean-energy jobs are growing 10 times faster than the statewide average, they still represent only a small percentage of total jobs in California.

Yes. But we're at the front end of a huge revolution and we can build huge companies out of this.

Except that we're in a historic recession, which is technically over, but in reality for many people it's not.

Look. At 12.5 percent unemployment, if you aren't sympathetic to the people of this state who are struggling, then you're not paying attention. This is a huge deal.

So are clean-energy jobs really going to bring down the unemployment rate in the near term?

It's going to be gradual and build for a long time. But yes, I think it will in the near term. For example, [before the interview started] we were talking about CODA [electric cars]. If that company succeeds and they have battery plants or car assembly plants in California, that will be jobs. So yes, if we create companies that have new technologies, we will have jobs. If you look at the Internet boom and bust of the late '90s and early '00s, what are the big companies that were built? Yahoo, eBay, Google... Where are they?

They're some of the biggest employers in California.

Right. They're all here. Where are the big Internet companies on the East Coast? There are none. That's what we do. We create new industries and big companies come out of it and they hire thousands of people. We're talking about redoing the grid. That's not some engineer or computer scientist sitting there. That's part of it, but you're also talking about construction and manufacturing jobs. It's not going to solve our problem over night. But long term don't we have to back the fastest growing, potentially biggest industries? Yeah.

California gubernatorial candidate Meg Whitman has voiced her opposition to Prop 23, which you lauded on The Huffington Post, but proposes a one-year moratorium on AB 32. Some might say this is a reasonable middle ground.

But I would not be one of them. Opposing Prop 23 is a statement that we need to have this new green energy economy for health, economic, and national security reasons. Opposing AB 32, which is what Prop 23 does, is saying, "We don't need this green energy economy. The world is doing well on its own." Which is not true. If you want to get rid of AB 32, you should be supporting Prop 23. What she's saying is contradictory.

The Yes on 23 website says "The failure of Prop 23 will cost your family almost $4,000 a year in increased costs and taxes." I don't know where they are getting their number from, but...

... then again, neither do they. The studies they cite are incomplete, they've been disavowed by most people, and they never defend them because they're indefensible. Instead, they just quote the results. So if I said to you, "You're seven feet tall." And you say, "I'm standing against the wall and I'm five eleven." I just keep going, "You're seven feet tall." You just keep making the assertion without anything to back it up.

So even if that's an exaggerated number, you don't see costs increasing for individuals?

People's energy costs are going to go down because we're going to figure out ways so that you don't use so much of it. When Home Depot runs national ads during football games about how you save energy and money, it's over. Everyone knows we should do this. And whoever thinks government is not a part of this is a truth denier. When a society makes a huge change, the government has to put it in a framework so it works, so you have the proper incentives, so everybody does it together.

With no national legislation, is California making itself vulnerable by trying to go it alone?

California has led in every big environmental, intellectual and governmental initiative for the last 40 years. We are the people who thought up the idea of clean air and water, and said, "No, you can hit those miles per gallon targets if we set them." Every time, industry said, "It's impossible. We'll leave. Why should we have clean air and water? You are going to put us out of business." That's ridiculous. And every other state lagged and waited to see what we did. We need to look forward and deal with our challenges in an intelligent way and have a good, bright future. That's what we've always done.

Given Republicans appear poised for significant gains in both the House and Senate next week, do you see a path to national climate and energy legislation in the foreseeable future?

We send a billion dollars a day to the Middle East for fossil fuels. Can that possibly be in our national interests? There are strong reasons why some of the most conservative parts of the country should be in favor of what we're trying to do. And I've tried to make the pitch to communities of faith that if you really believe in God and believe we're stewards of the Earth, then you have to do this. And I think those people are sincere. And when I've talked to military people they've been incredibly supportive on this topic.

Should President Obama have pushed climate and energy legislation ahead of healthcare?

Well, I guess we'll never know, will we. Obviously this is something I feel really passionate about. He had to make a decision and he decided to do whatever it was he did.

According to a recent piece in the New York Times, "Chinese solar panel makers now supply about 40 percent of the California market..." Is the state at risk of losing green jobs to China?

Absolutely. This revolution is happening worldwide. There was a story about an American with American technology who has created a way to mine dumps, basically -- taking all the plastic and reusing it. And it's very efficient and it's happening in China and in Europe.

And it's not happening here because we don't have the regulatory framework.

Yeah, and it's like, we can do that. And if you want, I'll lend you a .45 and you can shoot yourself in the foot, too. The money and the expertise are going to come here. We're going to get the infrastructure here. We're going to get all these positive benefits just the way we have in Silicon Valley. Or not. That money is fungible. It spends just as well in Shanghai as Palo Alto.

What's the last thing you want undecideds to bear in mind as they head to the polls next week?

We need to build the green-tech revolution for our health and our economy, and we can't allow pollution to go unchecked. The people who are proposing Prop 23 are the polluters. We actually have out-of-state corporations trying to write their own environmental regulations, put them on the ballot and get it passed. You can't be for that.