(FORTUNE Magazine) – The Virgin king is set on saving the planet. Since the fall, Branson has pledged profits from his gas-guzzling airline businesses to alternative-fuels research and launched an eco-equivalent of the X Prize. His Virgin Earth Challenge, announced in February, offers a $25 million reward for a winning plan to remove greenhouse gases from the atmosphere. (For other business responses, see our "Green Is Good" package.) On a recent visit to the UN to promote another worthy cause, blindness-prevention charity ORBIS, Branson spoke to FORTUNE's Eugenia Levenson about his new crusade.

Who or what turned you green?

The Muppets!

So you wanted to prove Kermit wrong--that it is easy to be green?

Well, I read a lot of books, including Tim Flannery's The Weather Makers and James Lovelock's Gaia. I also met Al Gore, Ted Turner, and other people who were passionate about it. In the end, I realized the world has a serious problem, and if we carry on putting too much carbon and methane into the earth's atmosphere, we're going to snuff out the people and all the world's species.

Gore is a judge for the Virgin Earth Challenge. How did you meet the former U.S. veep?

He came to my house a year and a half ago and said, "I want to spend two hours and try to convince you to tackle this problem." By the end of those two hours, he'd got me thinking. A few months later I came up with the idea that since we had a dirty business in our airlines, if we put all our profits toward tackling global warming, it would be a good signal.

But Virgin Atlantic planes are still flying and producing emissions. Why not quit a dirty business altogether?

What we need to do is get our own house in order and reduce our carbon output. We're experimenting with towing planes to and from runways rather than turning on engines before pushback, and we're trying to buy lighter, more fuel-efficient planes. If we pull out, someone else will step in. Instead, we decided to reinvest all profits from our transportation businesses into trying to discover clean fuels.

The Earth Challenge is initially open for three years. Have you had any entries yet?

We've had over 15,000 submissions in the first month, so we're wading through them at the moment. There's one or two that the judges are [happy] about. They're complicated but could be quite exciting.

You now own two private islands in the British Virgin Islands, and you've said they'll be carbon neutral. How does that work?

We'll have windmills for wind energy and solar [panels] for solar energy as well as for when the wind's not blowing. We may have a little bit of wave power as well. No petrol on the islands is the plan. Hopefully we'll get there.