Published on October 7th, 2018 | by Zachary Shahan0
An Open Letter To GE CEO Lawrence Culp
October 7th, 2018 by Zachary Shahan
Capricorn Investment Group (CIG) reached out to CleanTechnica with a request to re-publish their open letter to the new CEO of GE, Mr. Lawrence Culp. The letter urges the company to aggressively invest its resources into clean technologies.
We stand behind this message and gladly share it with our CleanTechnica readers, throwing our full support behind the letter. Below is a brief statement from CIG, followed by the complete text of the open letter.
“GE has lost its way over the years, focusing and even doubling down through acquisition on its legacy declining businesses such as coal turbines. We believe the company has extraordinary potential to lead the world on its transition to clean energy and transportation and to reap the benefits from these fast-growing industries.
“We are writing to the CEO, as investors, to encourage him to make the difficult but necessary decisions and to turn GE into an engine for innovation and growth in wind, solar, battery storage, electric vehicles and beyond. GE’s legacy businesses are declining faster than GE would like to believe. Soon there will be no more coal turbines to sell. One day GE will even have sold its last jet engine.
“GE was once the innovator and disruptor. In contrast, there has been entirely insufficient focus in the recent decade on allocating management resources and capital to the new markets such as solar, wind, battery storage and electric vehicles.”
— Ion Yadigaroglu, Partner of Capricorn’s Technology Impact Fund.
Dear Mr. Culp:
As you take the helm of one of America’s most iconic companies, and one that has historically been at the forefront of innovation in energy, we wanted to call your attention to the greatest opportunity for GE to fulfill its obligations to your shareholders while leading the world on its transition to clean power and transportation.
Power markets are undergoing titanic shifts globally. We are in a race to bring electricity to the last billion people who lack it. The deployment of clean power technologies, including solar and wind, increasingly complemented by battery storage, is rapidly outpacing that of coal and gas, driven not only by more competitive economics but also the climate commitments made by nearly 200 countries in Paris three years ago. As greenhouse gas emissions become increasingly priced globally, this cost advantage will accelerate. Over $330 billion was invested in 2017 in renewable infrastructure, mainly solar and wind — over twice the amount spent on fossil power plants. Electric vehicles are also on an explosive growth trajectory, increasing demand for batteries, power electronics, and electricity from clean power sources.
You know these figures already. You also know that GE’s power business has just taken a $23 billion charge as a result of its misguided focus on turbines for gas and coal plants, technologies that are rapidly becoming uncompetitive. This was partly a consequence of GE’s ill-timed acquisition of Alstom for over $10 billion in 2015, precisely the year when the world’s governments signed the Paris Agreement, sending a strong signal that the era of reliance on fossil fuels is coming to an end. In 2017, GE further increased its footprint in hydrocarbons by acquiring a stake in the oilfield services company Baker Hughes in a multi-billion dollar transaction, an investment that has since lost value. While the $23 billion charge shows that GE recognizes the magnitude of these strategic errors in its power business, GE continues to push outdated coal and gas technologies globally. The company is actively doing so in Vietnam, Egypt, Kenya, and elsewhere.
GE has a very successful wind turbine business, with revenues of $9 billion last year. GE also has deep technical expertise in energy storage and batteries, which could place the company at the center of the electric vehicle transition. This transition will require hundreds of billions of dollars in investment and generate decades of revenues for manufacturers. To date, GE has chosen not to participate significantly in the solar market, but this industry is still young and installations are growing rapidly. New solar technologies offer a chance for GE to leapfrog into a $150 billion market. There are many other opportunities for the company to lead the clean energy transition, from fusion energy to the electrification of aircraft, where GE’s aviation business unit could well become a leader.
GE clearly has the expertise and the resources to capitalize upon these trends and to thrive in these fast growing industries. For GE to become a leader again, the company must further scale back investment in and deployment of fossil fuel technologies and focus on clean technologies.
As GE’s new CEO, you must make many difficult decisions. One of your most critical should also be one of the simplest: Will GE continue fighting to protect decelerating fossil fuel businesses or lead the world into a more profitable and sustainable future?
Ion Yadigaroglu, Partner, Capricorn’s Technology Impact Fund
Tony Davis, CEO, Inherent Group
Dipender Saluja, Partner, Capricorn’s Technology Impact Fund
Sir Christopher Hohn, Co-Founder, Children’s Investment Fund Foundation
Adam Wolfensohn, Co-Managing Partner, Encourage Capital
Jason Scott, Co-Managing Partner, Encourage Capital
Stuart Kinnersley, Managing Partner, Affirmative Investment Management
Cole Frates, Founder, Renewable Resources Group
Elizabeth E. McGeveran, Director of Impact Investing, McKnight Foundation
Stephen Heintz, President, Rockefeller Brothers Fund
Valerie Rockefeller, Trustee – Chair, Rockefeller Brothers Fund
Frohman Anderson, Managing Director, EverWatch Financial
Annie Chen, Chair, RS Group
Robert Litterman, Founding partner, Kepos Capital
Vincent Barnouin, CEO, Ecofin
Ramsay Ravenel, CEO, Grantham Foundation
Jigar Shah, President & Co-Founder, Generate Capital