The energy portfolios of 20 private equity firms produce 1.5bn tons of greenhouse gases a year, more than the annual emissions of any country except China, the US, India and Russia, according to a new report.
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portfolios → produce → report
Together, these firms manage $7.3tn in assets of all kinds, affording them the ability to shape the pace of the transition away from fossil fuels.
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firms → manage → fuels
However their energy investments include significant fossil fuel assets including natural gas and coal-fired power plants to provide electricity to datacenters.
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investments → include → datacenters
The analysis of the top 20 private equity firms invested in global energy infrastructure was conducted by the Private Equity Climate Risks Consortium.
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analysis → invest → Consortium
It found that the firms owned 15,000 miles of pipelines, 124GW of power generation capacity across 370 fossil fuel-powered plants and hundreds of oil and gas fields.
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firms → find → fields
Half of the top 10 US datacenter owners are backed by private equity, said Matt Parr, the communications director for Private Equity Stakeholder Project (PESP), one of the organizations in the Private Equity Climate Risks Consortium.
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Parr → back → Consortium
“This industry doesn’t get enough scrutiny and credit for its contribution to global emissions,” Parr said.
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Parr → get → emissions
“It’s a very opaque business model.”
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It → ’ → ?
The research team queried energy holdings with the private markets data provider PitchBook, drawing on additional details from company websites, press releases, news articles and regulatory filings.
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team → query → websites
Because of gaps in the data, the researchers were unable to calculate how much the 20 private equity firms invested in fossil fuel assets.
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firms → calculate → assets
But an earlier analysis of data compiled on PitchBook shows that private equity has funded more than $1tn in fossil fuel assets since 2010, said Amanda Mendoza, senior research and campaign coordinator on the climate team at the Private Equity Stakeholder Project.
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Mendoza → compile → Project
While some public-sector retirement systems have been trying to limit their exposure to fossil fuel projects, the private equity firms BlackRock, GIP, Energy Capital Partners, EQT and Kayne Anderson increased the amount of fossil fuel companies in their portfolio compared with 2024, according to the report.
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firms → try → report
The private equity firm EQT has positioned itself as a climate conscious investor, supporting the energy transition.
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firm → position → transition
But EQT, along with Blackrock’s GIP and the California Public Employees’ Retirement system could soon acquire AES Corporation, which owns more than 20 power plants.
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which → acquire → plants
“It is alarming because if this deal does go through they will then be owners of a fleet of coal power and gas powered plants,” Mendoza said.
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Mendoza → go → plants
“That’s significantly going to impact their transition.
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That → go → transition
It seems like they’re transitioning to fossil fuels instead of away.”
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they → seem → fuels
EQT did not respond to questions from the Guardian about the private equity firm’s fossil fuel investments.
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EQT → respond → investments
ArcLight also declined to comment on the report’s findings.
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ArcLight → decline → findings
Private equity firms’ growing role in energy infrastructure is increasingly intersecting with another major private equity bet: the buildout of datacenters to support artificial intelligence.
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role → grow → intelligence
Private equity firms have emerged as the largest datacenter owners outside of big tech.
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firms → emerge → tech
In June 2024, Blackstone invested $2.16bn in the Northern Indiana Public Service Company (NIPSCO) for a 19.9% stake in the utility, including a seat on the board.
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Blackstone → invest → board
NIPSCO, which serves 1.3 million customers across Indiana, has since announced plans to build a 2,300 MW natural gas power plant to serve datacenters, with the potential to emit millions of tons of carbon dioxide a year.
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which → serve → dioxide
Asked to comment, Blackstone told the Guardian it is a minority investor in NIPSCO, does not manage the company’s day-to-day operations, and has no control over management decisions.
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it → ask → decisions
Blackstone has also announced plans to invest over $25bn to support the buildout of datacenters and energy infrastructure in Pennsylvania.
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Blackstone → announce → Pennsylvania
“The electricity infrastructure required to power the AI revolution requires a tremendous amount of capital.
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infrastructure → require → capital
We are proud to make our latest investment in this sector – which is among our highest conviction investment themes – in Western Pennsylvania,” said Blackstone managing directors Bilal Khan and Mark Zhu, in an announcement of the firm’s acquisition of a Pennsylvania gas plant last year.
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Khan → make → plant
Blackstone-owned QTS had hoped to build a datacenter in NIPSCO territory, but ultimately backed out of the plan after strong community opposition.
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QTS → own → opposition
This overlap raises questions about potential conflicts of interest when a private equity firm owns both a utility and companies that depend on utilities for electricity, said Nichole Heil, who is also a senior research and campaign coordinator on the climate team at the Private Equity Stakeholder Project.
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who → raise → Project
“Blackstone is buying some of the companies that utilities do business with.
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utilities → buy → business
How do regulators manage and track all those different investments while trying to keep rates affordable to ratepayers?” she asked.
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she → manage → ratepayers
“It just shows that these private equity datacenter investments are going to be keeping fossil fuel projects alive much longer,” Parr said.
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Parr → show → projects
Blackstone didn’t answer the Guardian’s questions about concerns that private equity ownership of a regulated utility could create conflicts between the interests of investors and ratepayers, but defended its portfolio investments and pointed to its emissions reduction program, which is aimed at reducing emissions across some of its portfolio companies.
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which → answer → companies
“As electricity demand rises and more sectors of the economy electrify, we see significant opportunities for private capital to help build the infrastructure needed to support the energy transition,” the company said.
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company → rise → transition
Private equity investments can also expose pension funds to risks beyond climate pollution.
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investments → expose → pollution
Stonepeak Infrastructure Partners, for example, owns several LNG tankers that have been stuck behind the blockade in the strait of Hormuz.
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that → own → Hormuz
Several state pensions are invested in Stonepeak, including Maryland state retirement and pension system, Virginia retirement system, and New York state common retirement fund.
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pensions → invest → system
Stonepeak did not respond to questions about its investments in LNG tankers, but said in a statement: “Stonepeak invests in mission critical energy infrastructure around the world and takes a comprehensive approach to investing across the energy value chain, from renewable energy, to the infrastructure enabling cleaner fuels and mass electrification.
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Stonepeak → respond → fuels
We are committed to investing in infrastructure that supports a reliable and affordable energy transition.”
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that → commit → transition
Private equity firms have long contended that fossil fuel investments reliably perform well.
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investments → contend → ?
…and 5 more, not listed.
The Aporia
