Clinton’s Efforts on Ethanol Overlap Her Husband’s Interests
Todd Heisler/The New York Times
Senator Hillary Rodham Clinton has sponsored legislation to provide incentives for ethanol and has worked to foster a favorable environment for investment in it.
*
By MIKE McINTIRE
Published: February 28, 2008
To big rounds of applause, three of the world’s richest men — Richard Branson, Ronald W. Burkle and Vinod Khosla — trooped onto a New York ballroom stage with former President Bill Clinton to pledge support for renewable energy projects to combat global warming and create jobs.
Skip to next paragraph
Related
T
Former President Bill Clinton with Richard Branson in 2006. Both have been involved in efforts on alternative fuels.
It was September 2006, and the Clinton Global Initiative, the annual star-studded networking event for philanthropists and investors, had generated commitments to spend billions on ethanol and other alternative fuels. Cast as good works, many were also investments by businessmen hoping for a profit.
And sitting in the audience was an influential public official who had also taken an active interest in renewable sources of fuel: Senator Hillary Rodham Clinton.
Several months earlier, Mrs. Clinton had sponsored legislation to provide billions in new federal incentives for ethanol, and, especially in her home state of New York, she has worked to foster a business climate that favors the sort of ethanol investments pursued by her husband’s friends and her political supporters.
One potential beneficiary is the Yucaipa Companies, a private equity firm where Mr. Clinton has been a senior adviser and whose founder, Mr. Burkle, has raised hundreds of thousands of dollars for Mrs. Clinton’s campaigns. Yucaipa has invested millions in Cilion Inc. — a start-up venture also backed by Mr. Branson, the British entrepreneur, and Mr. Khosla, a Silicon Valley venture capitalist — that is building seven ethanol plants around the country. Two are in upstate New York.
A Cilion executive said Mrs. Clinton’s office had been helpful to the company as it pursued its New York projects. More broadly, by steering federal money, organizing investor forums and offering the services of her staff, she has helped turn the upstate region into an incubator for ventures like Cilion’s, while providing a useful showcase for her energy proposals on the campaign trail.
Certainly Mrs. Clinton is doing what would be expected of a senator trying to stimulate a sagging rural economy in her home state, not to mention a presidential candidate mindful of the importance of ethanol in corn-producing places like Iowa. But her actions take on an added dimension when they intersect with Mr. Clinton’s philanthropic and profit-making endeavors, which have periodically raised questions as Mrs. Clinton seeks the Democratic nomination for president.
Yucaipa’s partnership with the rulers of Dubai and its investment in a Chinese media company drew attention to Mr. Clinton’s connection to the fund when his wife was preparing her presidential run last year. In December, aides to Mr. Clinton said he was taking steps to end his relationship with Yucaipa to avoid potential conflicts of interest or political imbroglios for his wife, should she become the Democratic nominee.
Representatives of the Clintons declined repeated requests for comment that included a detailed set of questions submitted to Mrs. Clinton’s campaign more than a week ago.
Because Mr. Burkle’s Yucaipa funds are private, and the Clintons have refused to release their tax returns, details of Yucaipa’s investments and Mr. Clinton’s potential to profit from them are not publicly available. Last year, after Mr. Clinton published a book on philanthropy that extols the virtues of investing in renewable energy and contains a reference to Cilion, a spokesman for the former president told New York magazine that he consulted for Yucaipa on renewable energy investments but was not involved in Cilion.
On Wednesday, a spokesman for Yucaipa declined to say how much it had invested in Cilion, but said it amounted to less than 5 percent of the company’s equity — small by Yucaipa standards, but enough for it to be represented on Cilion’s board. He said Mr. Clinton did not stand to profit from Yucaipa’s investment in Cilion.
Under an agreement with Mr. Burkle in 2002, Mr. Clinton was to provide advice and find investment opportunities for several domestic and foreign funds in Yucaipa’s portfolio, and would receive a share of the profits from those funds. On a financial disclosure report that Mrs. Clinton filed as a presidential candidate last year, Mr. Clinton listed several direct investments through Yucaipa, including one in a Brazilian sugar-cane ethanol company founded by Mr. Khosla, but Cilion was not among them.
Mrs. Clinton is far from alone in proposing increased federal incentives for renewable energy — her opponent, Senator Barack Obama of Illinois, backs even greater spending on biofuels — and not all of her actions on ethanol would benefit the interests of Mr. Clinton and his associates. She has voted to preserve a tariff on Brazilian ethanol imports, which helps domestic ethanol producers but works against investors in Brazilian facilities.
Skip to next paragraph
Related
Times Topics: Hillary Rodham Clinton
Blog
The Caucus
The CaucusThe latest political news from around the nation. Join the discussion.
* Candidate Topic Pages
* More Politics News
In fact, Mrs. Clinton had long opposed ethanol subsidies, but in May 2006, she switched gears and introduced a bill to create a $50 billion “strategic energy fund” to expand the use of ethanol and other alternative fuels. The bill, which was reintroduced last year, would direct billions of dollars to develop cellulosic ethanol, an experimental fuel made from organic materials other than corn.
In addition to the legislation, Mrs. Clinton has spent an increasing amount of time in upstate New York, promoting the region as fertile territory for renewable energy projects. In Lockport in July 2006, she said she was working with the State University of New York College of Environmental Science and Forestry — which has offered technical assistance to Cilion and other companies in the region — to support locally produced ethanol, rather than “just relying on corn in the Midwest.”
“Because I want New York farmers, I want farmers around the country, to participate in this,” she said. “It’s going to take building production facilities, and we’re starting to do that.”
Several business and academic leaders in the region said they had crossed paths more than once with Mr. Clinton, Mrs. Clinton and Mr. Khosla on the issue of biofuels, specifically cellulosic ethanol.
Cornelius B. Murphy Jr., president of the environmental college, said Mrs. Clinton became very active in assisting the school’s renewable energy projects starting in late 2005, and has since been involved in about eight events with the college. In 2006, the college also heard from Mr. Clinton, who wanted to talk to experts there about cellulosic ethanol and the concept of using forest products in place of corn.
“I’m amazed at how much her husband has picked up on this,” Dr. Murphy said of the former president. “He was very interested in the growth of energy feed stocks and how that could be worked into an integrated biorefinery.”
One of the biggest champions of cellulosic ethanol is Cilion’s founder, Mr. Khosla, a co-founder of Sun Microsystems who has grown close to Mr. Clinton in recent years through a mutual interest in renewable energy. In November, at a renewable energy forum in Iowa that was attended by some of the presidential candidates, Mr. Khosla opened his PowerPoint presentation with a quote from Mr. Clinton on the economic benefits of green investments.
Mr. Khosla provided seed money to create Cilion in June 2006, and shortly before the Clinton Global Initiative that September, Cilion announced it had received $160 million more, including an unspecified amount from Yucaipa. He is also backing another company, the Mascoma Corporation, which wants to build a plant in the Rochester area that will convert forest products, like wood chips and switch grass, into cellulosic ethanol.
Mr. Khosla did not respond to a request for comment.
Although Cilion uses corn, it hopes to eventually make cellulosic ethanol once the technology becomes commercially viable, said Jerry Wilhelm, the company’s executive vice president. Mr. Wilhelm said Cilion, which also has projects in California, Pennsylvania and Washington State, picked New York because of its large potential ethanol market, the availability of farmland and local support.
Mr. Wilhelm said that the New York projects were at an early stage, but that Mrs. Clinton “definitely has been helpful,” not only in writing letters but also in her general support of renewable energy initiatives in the region.
“We’ve gotten some letters of support from her that we’ve used in the permitting process,” he said in an interview. “We haven’t asked for a lot, but what we’ve asked from her, she’s responded.”
Late Wednesday, Yucaipa disputed that Mrs. Clinton had written any letters on behalf of Cilion. Efforts to reach Mr. Wilhelm to clarify the matter were unsuccessful.
Cilion’s efforts to set up a base of operations in upstate New York included joining the board of the Greater Rochester Enterprise, a nonprofit group that promotes business opportunities in the region. The group, which provided Cilion with office space and made introductions to key people, has worked closely with Mrs. Clinton on several renewable energy initiatives.
Mrs. Clinton arranged for the group to work with the U.S. Green Buildings Council to produce a report on the economic benefits of renewable fuels and energy conservation in the Rochester area, where both of Cilion’s ethanol projects are. The report concluded, among other things, that there should be more incentives to use locally generated renewable energy, and it cited a Cilion project, along with several others, as an example of available resources.
The 17-page report, which devotes a full page to Mrs. Clinton and mentions her eight times, “would not have happened without the senator,” said Dennis M. Mullen, president of the Greater Rochester Enterprise.
“We have met with the senator on numerous occasions, not only on ethanol but also other issues,” Mr. Mullen said. “She has helped us promote that in numerous ways.”
Cilion, meanwhile, recently revamped its Web site and added comments from Mrs. Clinton and other presidential candidates to illustrate the depth of political support for ethanol. The new site quotes Mrs. Clinton saying the country needs “an Apollo-like effort” to invest in renewable energy, and it provides a link to her strategic energy fund at hillaryclinton.com.
NYT
AI
