JPMorgan launches alternative energy investment
The investment firm announced in an internal memo that it has created an alternative energy investment unit. Vandana Gupta, previously a senior managing director in General Electric’s commercial finance group and responsible for $1 billion in equity investments in the energy and power sectors, will head the venture.
Renewable and low-emissions energy technologies are attracting huge investments around the world, as interest in carbon-free energy continues to rise. UK-based analysts New Energy Finance forecasts that total venture capital and private equity investments between 2006 and 2012 in the clean energy sector will be over $100 billion.
“Our view is that this is going to be a tremendous growth opportunity both in terms of the sector itself and a huge opportunity for investment banks,” Doug Braunstein, JPMorgan’s head of investment banking in the Americas, told the Financial Times. Other financial institutions involved in clean energy technologies include Goldman Sachs, which adopted a climate change policy in 2005 and has since brokered a number of large alternative energy deals.
Citigroup recently announced a plan to spend $50 billion over the next 10 years to address global climate change, including investing and financing $31 billion in clean energy and alternative technology over the next ten years. Citigroup also pledged to expand ten-fold its capital commitment to over $2 billion of private equity over the next ten years in renewable and alternative energy, clean technologies, energy efficiency, carbon credit markets, waste and water management and sustainable forestry.
Morgan Stanley announced in October 2006 that it will invest approximately US $3 billion in carbon credits and other greenhouse gas emissions reduction initiatives over the next five years.
Earlier this year, JP Morgan Chase and Innovest Strategic Value Advisors introduced the Environmental Index-Carbon Beta platform (JENI-Carbon Beta), the first corporate bond index to take climate risk into account.
Along with the new alternative energy investment unit, JPMorgan will also make its research on climate change and financial markets available to the public on its website. At JPMorgan, a series of research reports on the dangers of and investment opportunities from global climate change are available to download.
Recent reports include: “Capturing the Gains from Carbon Capture,” “Global Utilities: Trading Climate Change;” “Coal and Carbon Controls;” and “Liability for Climate Change.”