Meet the U.S. billionaire who wants to kill the Keystone XL pipeline

EDMONTON — The Globe and Mail

Tom Steyer left Farallon Capital Management and now devotes his time to talking about climate change. (Rich Pedroncelli/AP)

Tom Steyer is a man at odds with himself. He made his fortune by founding a hedge fund with a keen interest in the energy sector, including leading oil, pipeline and mining companies. The firm also gobbled up stock in BP a year after its Deepwater Horizon oil spill in the Gulf of Mexico. All this should hardly make him a darling of environmentalists.

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Yet there’s a green streak to Mr. Steyer – one that led last year to something of an existential crisis: Climate change, the American billionaire decided, was the “defining issue of our generation.” And so he left the firm he had spent a quarter-century building, Farallon Capital Management, because it valued a company’s bottom line, not its carbon footprint.

“I have a passion to push for what I believe is the right thing,” Mr. Steyer, 55, said in an interview with The Globe and Mail this week. “And I couldn’t do it in good conscience and hold down a job – and get paid very well for doing a job – where I wasn’t directly doing the right thing.”

The Harper government and Canada’s oil patch might have wished he had stayed at Farallon.

Mr. Steyer has since set his sights on the proposed Keystone XL pipeline. He has waded into the Democratic primary in Massachusetts by lampooning a pro-Keystone Democrat, Stephen Lynch, for being in the pocket of “big oil.” Mr. Steyer also accused him – in the form of a cheeky banner, pulled by a plane through Boston’s skies – of a loyalty akin to treason: being a Montreal Canadiens fan.

It matters not to Mr. Steyer that Massachusetts could hardly be farther from both the Keystone route and his native San Francisco. Or that Mr. Lynch’s anti-Keystone opponent had to donate to charity because Mr. Steyer’s interference violated a pact to keep outsiders from influencing the race. Or that Alberta’s heavy oil is, according a Jacobs Consultancy report cited by the provincial government, less carbon-intensive than heavy oil from Mr. Steyer’s home state of California.

“We have very little tolerance for hypocrisy on the magnitude that Tom Steyer has exhibited,” Lynch spokesman Scott Ferson said.

But Mr. Steyer has powerful friends – the likes of Warren Buffet, Bill Gates, Al Gore and Nancy Pelosi, the House minority leader who also happens to be his congresswoman. And this week, Mr. Steyer personally hosted President Barack Obama for a $5,000-a-head fundraiser, pleading with him to stop Keystone.

More broadly, though, he’s emerging as a patron of the coalition of environmental groups targeting the oil sands. An anti- Keystone protest staged this week targeted an Obama fundraiser hosted by Ann and Gordon Getty, oil heirs, and not that of Mr. Steyer, BP-buying hedge fund titan. “Tom Steyer is a great activist,” said Becky Bond, political director of CREDO Action, one of the groups that planned the protest. “We are allies in this fight.”

But, Mr. Steyer acknowledges, this whole fight isn’t strictly about Keystone.

“There’s definitely a symbolic side to this,” he said. “It has become, you know, a symbol in some ways in the fight over how to think about this. And that happens sometimes. Sometimes, specific incidents take on a life of their own.”

Mr. Steyer founded Farallon – now reportedly a $20-billion fund – in 1986. He’s a graduate of Yale and Stanford business school; at the latter, he and his wife, Kat Taylor, have since donated $40-million to found the eponymous TomKat Center for Sustainable Energy. The couple have also signed the Giving Pledge, to donate half their fortune to charity, and opened a not-for-profit community bank in Oakland, which Ms. Taylor leads.

Mr. Steyer doesn’t evoke an image befitting a hedge fund titan. He drives a decade-old Honda hybrid, which he bought at the time because he didn’t “want to contribute to this [Iraq] war by driving a big gas-user.” He wears plaid ties, typically red – he bought a bunch, and now people buy them for him, so it remains his thing – and has tousled hair that’s just this side of shaggy.

He and Ms. Taylor have four children, age 19 to 24. As they have grown older, Mr. Steyer has waded more into politics. He was a founding member of a Democratic think tank, the Hamilton Project. Then-senator Barack Obama attended the opening. Mr. Steyer worked on, and helped bankroll, two high-profile ballot initiatives in California. In the first case, in 2010, he fought against Prop 23, which would have relaxed the state’s environmental laws. In 2012, he was the force behind Prop 39, which toughened the tax code for major corporations. He struck a populist tone by saying the cash-strapped state needed to “close a loophole,” leaving California manufacturers fuming.

“There was no reason to slip the rug out from these very large, substantial, high-wage manufacturers … and heap all these new costs onto them, and then call it some tax loophole, which it wasn’t,” said Gino DiCaro, vice-president of the California Manufacturers and Technology Association, which fought Mr. Steyer on both ballot initiatives. “He clearly succeeded. He has lots of money and got his message out there.”

Mr. DiCaro was left with a grudging admiration for his deep-pocketed rival. “When he gets behind something, he doesn’t quit … You can say we congratulate him on his success, because he’s definitely good at what he does.”

In Massachusetts, Mr. Steyer is targeting his fellow Democrat, Mr. Lynch, a congressman seeking the nomination to replace the former senator, now Secretary of State John Kerry. Mr. Lynch is pro-Keystone while his chief opponent, front-runner and fellow Democratic congressman Ed Markey, is against the proposed pipeline. The positions are largely moot, as Keystone doesn’t come anywhere near Massachusetts, but Mr. Steyer says climate decisions affect all 50 states. He has bought ads, hired a roving billboard and made the allegation that Mr. Lynch was a Canadiens fan (a play on him being a fan, also, of Canadian oil). Mr. Lynch’s camp called that “outrageous,” and has fired back.

“[It] leaves us to wonder if the money makes him that arrogant, or was he born that way?” said Mr. Ferson, his spokesman, adding the congressman will support whatever Keystone decision the President makes. “But that’s not good enough for Tom Steyer, who made all of his money off of BP stock? It’s the height of hypocrisy.”

TransCanada Corp., the company behind the proposed Keystone XL project, has also fired back. “If Mr. Steyer is truly concerned about climate change, he should focus his money and time on much larger sources of greenhouse gases than the oil sands industry, such as coal-fired power generation in the United States,” spokesman Grady Semmens said in a statement.

When these critiques are presented to Mr. Steyer, he pauses.

“Of course coal is a huge issue here, in the United States and around the world. And I don’t disagree with TransCanada on the need for us to dramatically reduce our usage of coal,” said Mr. Steyer, who last month spoke at a Los Angeles anti-coal rally alongside Mr. Gore. “But I think the biggest thing that we need to understand is that we need a different way of thinking about energy, and honestly this pipeline is an example of the wrong way to think about energy.”

Rumours, meanwhile, have swirled about Mr. Steyer’s political future. He says he has no plans to seek office. And he might be more valuable to Mr. Obama that way, working on climate change to shift public opinion and giving, he hopes, the “leeway” for Mr. Obama to nix the pipeline. Or, at least, that was Mr. Steyer’s pitch to the President during Wednesday’s fundraiser.

“We said we will go out and do that work for you, because we know you understand these issues and we’d like you to be able to do the right thing,” he said.

Farallon’s holdings, as of its last Securities and Exchange Commission filing, include Kinder Morgan, which is pushing to expand a pipeline from Alberta to Vancouver; Nexen, one of Calgary’s largest energy companies; and Potash Corp., the Saskatchewan mining giant. Farallon owns stakes in CB&I, a leading pipeline and oil platform manufacturer, and Union Pacific, one of many railroads moving more and more oil with existing pipelines full. Farallon also still holds stock in BP. Mr. Steyer left Farallon at the end of last year, but all these were purchased under his watch. He still holds a stake, saying he’s asked for his portfolio to be greened.

“I really, honestly, have tried to think about that hard, and square my behaviour to my beliefs. Everybody gets to decide whether I’ve succeeded,” he said. He says he prefers not to read the press, but does take encouragement from family. His eldest child, a 24-year-old working at an NGO in Tanzania, cheers on his Keystone fight – “an enormous motivator for me,” Mr. Steyer said, allegations of hypocrisy notwithstanding.

“I’m going to try and be straightforward. It weirds me out to hear people say either I’m terrific or I’m a total snake,” he said. “I’d like to think I’m an okay guy.”

Follow on Twitter: @josh_wingrove

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