Ex-pols add power to ‘green’ movement

To understand politics, the adage goes, you’ve got to follow the money. But to understand money, it sometimes helps to follow the politicians.

At least three guys who know their way around Sacramento -- former California Controller Steve Westly, former Assembly Speaker Bob Hertzberg and former legislator and Secretary of State Bill Jones -- are trying to make a go of it in the alternative-energy industry. All told, their efforts are one of the most convincing signs yet that the business community’s growing passion for things green (beyond cash, that is) is likely to prove real and lasting.

The endeavors of the trio -- two in solar power, one in ethanol -- are hardly the only indicators that a societal shift is underway. Barely a week goes by when there isn’t some environmental news dominating the paper’s business section (if not the front page or even the cultural report): private equity investors agreeing to forgo the building of coal-fired power plants as part of their $32-billion acquisition of Texas utility TXU Corp.; Wal-Mart Stores Inc. hawking energy-efficient fluorescent light bulbs instead of traditional, incandescent ones; Bank of America Corp. earmarking $20 billion to, among other things, lend to companies that are trying to foil global warming; Al Gore storming the Oscars; oil behemoth BP donating $25 million toward a solar entry pavilion at the Los Angeles County Museum of Art.

But what’s especially significant about Hertzberg, Jones and Westly getting into the game is that each possesses an insider’s understanding of the nexus between public policy and commerce -- and it’s this intersection that will continue to shape and, to a large degree, decide the fate of this burgeoning sector.

Much of what’s happening reflects “a marriage between the political process and business,” says V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies, a nonprofit group in Sacramento.

White cautions that it’s easy to get swept up in the excitement and lose sight of the long, sustained effort that will be required to truly transform the way California generates and consumes energy. The passage last fall of the law to slash greenhouse-gas emissions 25% by 2020 was a landmark achievement. But the fact is, enormous challenges must be overcome to get there, including revamping the state’s electrical transmission grid and ramping up renewable power purchases.

How the rules on these and myriad other matters get written will go a long way toward determining who wins and loses in the marketplace.

Of the three politicos-turned-energy-entrepreneurs, Westly boasts the most impressive corporate resume. He worked at a handful of high-tech firms before becoming a top executive at EBay Inc., the online auction site, in 1997. He went on to gross $245.9 million from sales of EBay stock between 1999 and 2003.

Sitting in his Menlo Park office last week on the campus of Kleiner, Perkins, Caufield & Byers -- the famed Silicon Valley venture-capital concern -- Westly displayed the cool deportment of a can’t-miss investor (at least if you were willing to overlook the $35 million of his own dough that the Democrat sank into his ill-fated bid for the governorship last year). He’s been digging into energy issues, he points out, since he was a young aide in the Carter administration and the sweater-sporting president had solar panels affixed to the White House.

Back then, Westly admits, you had to be “a granola head” to spend $40,000 for a residential solar setup. But not anymore. Whereas it used to take 15 years for a homeowner’s investment to pay off in the form of lower energy bills, it’s now just seven to eight years before things pencil out, thanks to rising electricity costs and government rebates in certain states such as California. And that time frame could shrink to as few as four years, Westly says, if further government tax credits and refunds kick in.

Combine that with the public’s newfound sensitivity toward the environment and “you’re going to see the amount of solar being installed go through the ceiling,” he predicts.

Betting as much, Westly has invested in Akeena Solar, a Los Gatos, Calif.-based provider of sun-driven energy systems. He’s also consulting for Energy Innovations Inc., a solar-power supplier in Pasadena. And, confident that many of us will soon be charging electric cars with a solar hookup in our garages, he has taken a seat on the board of Tesla Motors Inc. The San Carlos, Calif., company is marketing a sexy, $92,000 battery-powered roadster that has become a media darling, and it’s aiming to build a $50,000 electric passenger sedan.

Like Westly, Hertzberg is also chasing the sun. In addition to other energy-related interests, he is chairman of a company called G24 Innovations Ltd., which manufactures lightweight, flexible solar cells in Cardiff, Wales. That’s a long way from L.A., where Hertzberg still lives and works as an attorney, but he says he located in Europe because it’s so far ahead of the U.S. in terms of environmental regulation.

That, though, was before the enactment of California’s greenhouse-gas law, which Hertzberg says “has had an extraordinary catalytic effect” in Washington and around the country. Eventually, he says, he could foresee moving his operations to the Golden State -- a place where the former Los Angeles mayoral candidate’s voice still carries a lot of weight.

“I’m not shy about making suggestions to policymakers,” the Democrat notes.

And finally there’s Jones, who is perhaps the oddest member of the green team. “I don’t think he voted for one piece of environmental legislation when he was in office,” says Fran Pavley, a former Democratic assemblywoman who helped carry the greenhouse-gas-reduction bill as well as authored an earlier measure limiting carbon emissions from tailpipes. That’s not quite accurate, but the California League of Conservation Voters did brand the Republican with a 0% rating in 1991.

Despite that, Jones says he’s been fascinated with biofuels for 30 years as a natural outgrowth of his experience as a Central Valley cattle rancher. Until recently, however, “the time wasn’t right in California” to make corn-based ethanol, he says. Now, in addition to the factors spurring other clean-energy ventures -- $3-a-gallon gasoline, war in the Middle East, “An Inconvenient Truth” -- California has become a mega dairy state, and cows happily feed on a byproduct of ethanol production, an oatmeal-like concoction known as wet distiller’s grain. “That’s a big plus,” Jones says.

The company that Jones chairs, Pacific Ethanol Inc., churns out 35 million gallons of fuel annually at a facility in Madera. It has announced plans to erect four more plants throughout the West -- two in California -- by 2008.

Some studies have concluded that ethanol may yield no environmental advantage once you consider all the fossil fuel burned by tractors to grow the corn and the heating equipment needed to distill it. But Jones maintains that ethanol is a benefit and must be part of the solution if California is to meet its clean-air mandate in a timely fashion.

“If there’s an alternative” much past the drawing-board stage, Jones says, “I haven’t seen it.”

Pacific Ethanol recently moved its corporate headquarters from Fresno to Sacramento. Jones says this was done in part to accommodate the company’s president, who lives in nearby Davis. But he acknowledges that it doesn’t hurt to be in the capital.

In this business, much will depend on plugging in to the source of power.

Rick Wartzman is an Irvine senior fellow at the New America Foundation. He is reachable at rick.wartzman@latimes.com.