We Will Create A Green New Deal, says Gore

Global campaigner and investment sidekick call for 'sustainable capitalism'

For a man with the very survival of human civilisation weighing heavily on his broad shoulders, Al Gore cuts a surprisingly relaxed figure. With a Diet Coke in hand, and chewing gum rolling around inside his mouth, one of the great "what ifs" of modern political history strolls into the boardroom of his London-based asset management firm, located in one of the city's "most environmentally friendly buildings".

Gore is in the capital, as he is every few months, to spend a couple of days meeting with his partners at Generation Investment Management, the "sustainability-driven" asset management firm he set up in 2004 with David Blood, who, as the former chief executive of Goldman Sachs Asset Management, once managed investments worth $325bn (232bn). As is the case everywhere, the numbers are somewhat smaller these days, but the firm they both wanted to call Blood and Gore (sadly, it was overruled by the rest of the board) still manages a pot of investments worth billions, according to Blood.

As chairman, Gore, 61, says he spends about "one day a week" working for Generation, but his press handlers won't expand on what investments he holds or remuneration he receives, other than to say he initially used his own money to "experiment with" in trial investments during the two-year period when the company's "structure and philosophy" was being established ahead of any outside investors being invited to join them. It is tempting to see Gore's role at Generation as the day job, allowing him the time and financial security to spend the rest of the working week on his three-decade-long quest to warn the world about the perils of climate change. But he insists that his role at Generation is as important as any of his other high-profile projects.

Blood and Gore couldn't have picked a more apt time to agree to talk about their vision of "sustainable capitalism", with the global economy and the planet's environmental health in twin decline. What they are keen to prove, they say, is that the short-termism of a market "driven by quarterly reports" is unsustainable. "The focus on short-termism has reached a ridiculous extreme," says Gore. "The business cycle is much longer than that and some investments take much longer to reveal their full value and profitability." They have chosen a three-year period in which to judge investments, though "many people would say is still too short", says Gore.

This view broadly chimes with the now widespread call for a "green new deal", as reflected in the raft of environmental measures embedded within many of the national economic stimulus packages announced around the world. But this promised new dawn is also widely predicted to be one in which the heavy hand of regulation will loom large. "Yes, we're going to need more regulation," says Blood. "Yes, raw capitalism failed us. That shouldn't be a surprise to anybody. But we also have an opportunity to create a green economy. To put a price on carbon, through tax or cap-and-trade, or both. That is an important step to making economics sustainable."

But the European carbon market is in disarray, with the price of carbon at such low levels that it now arguably rewarding the big polluters. Earlier this week, the environmental scientist James Lovelock said carbon trading was a "scam".

"The European trading system got off to a bad start, but they have addressed those flaws and made it work much better," Gore responds. "The fundamental problems are that it's like a bucket with a large hole in it because the US and China are not involved."

Gore says that, since the election of Barack Obama last November, he feels much more bullish about the chances of political progress in tackling climate change. But one group who are unlikely to ever "get it" are the ever-vocal contingent of climate change sceptics, the most prominent of whom were gathered at a conference this week in New York. Al Gore, the world's best-known climate change "alarmist", as the sceptics like to say, was a popular source of ridicule and ire at the conference. Gore brackets the sceptics with those who believe in creationism: "It's fed by a huge amount of funding from carbon special interests who have been financing these phoney, pseudo-scientific reports and they have a self-interest in sowing doubt. Doubt is their product.

"It's also fed by an ideological opposition and, coming out of the 20th century, the battle against excess statism in various forms became a deeply held view, and I share that view if it's stated properly, but some take it to such an extreme that anything which implies a new regulation or a new role for government is automatically attacked."