The Man Who Conquered Yale Is Now Taking on Climate Change


(Bloomberg) -- Dean Takahashi, the second-in-command at Yale’s $30 billion endowment fund, woke up early one morning last summer and turned to his wife. “I had a great idea,” he said. “Kelp!”

The idea had occurred to him overnight: What if he were to pack kelp into large, carbon-storing cubes, encase them in durable Roman-style concrete, and drop them into the deep sea? The slimy strands of seaweed are some of the world’s most efficient absorbers of carbon. “Kelp grows really fast, and it dies every year,” Takahashi says. Compressing that kelp and sinking it down to the ocean floor would effectively keep that carbon from escaping into the atmosphere, helping to slow the global warming process.

He had been intrigued by climate change for years, although his wife, Wendy Sharp, says he’s always been full of creative ideas. Along with the head of the Yale endowment, legendary investor David Swensen, the 62-year-old Takahashi is known for seeing what others don’t. The two worked side by side for 33 years, and together built a new model for institutional investing that moved far away from plain-vanilla stocks and bonds toward private equity, hedge funds, and even timber forests. Their strategy helped the endowment grow to its current record high, from around $1 billion shortly before he began.

Then last summer, Takahashi announced he was leaving the investment office to start a new Carbon Containment Lab at Yale’s School of Forestry and Environmental Studies. Its long-term goal is to offset at least 1 billion tons of carbon dioxide emissions by the end of the century, but it also aims to create solutions capable of balancing out more than 10 million tons of emissions by 2030.

“Even I could not have predicted such a radical second act,” Sharp says of her husband’s career turn. “It has been a long time since I’ve seen Dean this intellectually passionate about something.”

William Nordhaus, who won the Nobel Prize in Economic Sciences in 2018 for his work on the “global interplay between the economy and the climate” and chairs a task force that recommended Yale institute a carbon charge on campus, sits on Takahashi’s board. Jeremy Grantham, who co-founded the investment firm Grantham Mayo Van Otterloo and is devoting almost his entire fortune of more than $1 billion to combat climate change, says his foundation offered to donate to the Carbon Containment Lab. Takahashi told him he didn’t need it—he’d already raised enough. The money came from friends and other supporters, and it was enough for the lab to get by for seven or eight years, Takahashi said. Still, Grantham says he offered a $500,000 IOU in case the lab needs it.

Takahashi is an economist by training and an investor by profession—in other words, not a scientist. His first four hires started last month, and he’s planning to recruit as many as eight more with a range of expertise. He’s looking to steer the science coming out of his lab toward solutions that can scale, and thus have a bigger impact on reducing the amount of greenhouse gases in the atmosphere. “What’s different here is the opportunity to connect those potential solutions with such an incredible depth of investment knowledge and such a track record of making important things happen,” says Ingrid Burke, dean of the Yale forestry school. “That’s where the power of this idea lies.”

Plus, he’s got some research questions of his own. “It occurred to me I have all these ideas,” he says. “Instead of thinking about it or talking about it, someone ought to do something. It should be me. I could work another decade” at the endowment “or do this,” he says. “I was really excited about it.”

The Man Who Conquered Yale Is Now Taking on Climate Change

Takahashi was born in Cleveland, but grew up mostly in the New York suburb of White Plains, where his father, a Korean War veteran, worked as a manager for IBM.

He entered Yale in 1976, where he played rugby on the 1978 Ivy League champion team, managed the student agency that ran the laundry service on campus, and presided over the student council at his residential college. That’s where he met Sharp, who was studying the violin, and Swensen, an economics graduate student who served as his freshman counselor. Takahashi graduated from Yale School of Management in 1983 and began working at the investment office three years later. Except for a brief stint volunteering with what’s now known as AmeriCorps and some time he spent at an investment firm in Boston, Takahashi has either studied or worked at Yale for almost 40 years.

Climate change is a big deal in New Haven. The university has faculty studying topics as varied as ocean dynamics and species movement through time, and an engaged student body who rushed the field during last year’s Harvard-Yale football game to protest the endowment’s holdings in fossil fuels. Yale has consistently resisted calls to divest over the years, and because it doesn’t publicize the contents of its portfolio, it’s impossible for outsiders to know the extent of its investments in carbon-related industries. “Yale has the will and the capacity to make a profound difference in the fight for our planet’s future,” university President Peter Salovey said in a public statement after the game. “In this shared work, we must above all find strength in what unites us.”

Despite its position on divestment, the university has made some high-profile investments in climate change mitigation over the years. In 2005 the school committed to reducing greenhouse gases by 43% by 2020. A few years later, Takahashi began working with the investment office on a wind farm project in Roxbury, Maine, on endowment-owned land. Takahashi led efforts to secure a $102 million loan guarantee from the U.S. Department of Energy to help finance the 22 turbines, which are spread across 37 acres. Today the Record Hill Wind Farm produces about 120,000 megawatt-hours per year, enough to serve 19,500 homes, and is contributing to Yale’s latest goal, announced in 2016, to become carbon neutral by 2050.

But that wasn’t enough for him. “He was trying to make substantial investments in carbon offsets for Yale, but was frustrated that there were not enough ways to reduce greenhouse gases,” says Sharp, Takahashi’s wife, who now teaches music at Yale.

In the early 2000s, Takahashi had been on a fishing trip on the St. Croix River, on the border between Maine and Canada, and spotted a preserved log wedged into the bottom of the stream—his first encounter with the idea of a carbon sink. Around 2015 he considered buying a peat mine, which dried and scraped material from peat bogs to be packaged for garden shops, for the university but ultimately passed on the acquisition. Finally, after less than a year of conversations between Yale faculty and his colleagues in the investment office, Takahashi helped started the Yale Peat Carbon Project about two years ago on investment property in eastern Maine, not far from the St. Croix.

The Man Who Conquered Yale Is Now Taking on Climate Change

Burke, the forestry school dean, first met Takahashi within days of arriving at the school three years ago—an avid outdoorsman, he shared his favorite fishing spots with her. “Dean wanted to talk with us about the potential of increasing the amount of carbon sequestration and minimizing the release of methane from the forest’s abundant wetlands,” Burke says. Methane is a potent greenhouse gas, capturing many times more heat than the same amount of carbon dioxide. “If you can knock out a molecule of methane as opposed to sequestering six molecules of CO₂, then you’re onto a potential winner,” Burke says.

While the intention is solid, there’s still more research that needs to be done to understand carbon-sequestration technology, and especially possible ripple effects in the long term, says Barbara Haya, a research fellow at UC Berkeley who studies the effectiveness of carbon offsets. “Part of the challenge in this type of research is how to draw carbon out of the atmosphere without causing other problems when done at scale, given the complexities of how ecosystems work,” Haya says.

Initial work on the Peat Carbon Project is focused on various zones of peatland to better understand their botanical, hydrological, and carbon flux characteristics, along with the effectiveness of experimental techniques for reducing methane emissions.

Last summer, while the peat carbon project was underway, Takahashi’s kelp curiosity started. He started experimenting in the garage, testing out plastic garbage cans that could capture methane in a peat bog. He thought about sealing charred logs in plastic, effectively retaining their carbon for centuries, and filling old mines with them. Early last year, Takahashi asked Catherine Smith, his onetime classmate at Yale School of Management, for her feedback on the lab.

Smith, the former director of Connecticut’s Department of Economic and Community Development, is now retired and helps Takahashi with the university’s offsets program. “He’s typically the smartest guy in the room,” Smith says of her old friend. “He’s so non-assuming. He’s so quiet in so many ways.” She says he talked about applying investment principles to climate change mitigation, even at the research stage. “That’s the key to the success of these projects,” Smith says. “They have to break even or do better than that over time. Some of them upfront aren’t going to.”

That he’s not a climate scientist doesn’t matter. “You might have the science,” says Burke, “but the next series of challenges might be economic, social, and political.”

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.