Key facts
- The energy portfolios of 20 private equity firms emit 1.5 billion tons of greenhouse gases annually.
- These emissions are greater than those of any country except China, the US, India, and Russia.
- The firms collectively manage $7.3 trillion in assets.
- The analysis identified 15,000 miles of pipelines and 124GW of power generation capacity across 370 fossil fuel plants.
- Private equity has funded over $1 trillion in fossil fuel assets since 2010.
- Blackstone invested $2.16 billion in NIPSCO, which plans to build a 2,300 MW natural gas power plant for datacenters.
The energy portfolios of 20 major private equity firms are responsible for 1.5 billion tons of annual greenhouse gas emissions, a figure that surpasses the yearly output of every country except China, the United States, India, and Russia, according to a new report. These firms collectively manage $7.3 trillion in assets, giving them significant influence over the pace of the energy transition.
The analysis, conducted by the Private Equity Climate Risks Consortium, revealed that these firms hold substantial fossil fuel assets, including 15,000 miles of pipelines, 124 gigawatts of power generation capacity from 370 fossil fuel-powered plants, and numerous oil and gas fields. The report also noted that half of the top 10 US datacenter owners are backed by private equity.
Private equity has channeled over $1 trillion into fossil fuel assets since 2010, according to prior research. Despite some public pension funds seeking to limit fossil fuel exposure, firms like BlackRock, GIP, Energy Capital Partners, EQT, and Kayne Anderson have reportedly increased their holdings in fossil fuel companies. EQT, for instance, which presents itself as a climate-conscious investor, along with Blackrock's GIP and the California Public Employees’ Retirement System, is considering acquiring AES Corporation, which owns a fleet of coal and gas-fired power plants.
Blackstone's recent $2.16 billion investment in Northern Indiana Public Service Company (NIPSCO) for a 19.9% stake, which includes a board seat, has drawn attention. NIPSCO plans to construct a 2,300 MW natural gas power plant to supply datacenters. Blackstone stated it is a minority investor in NIPSCO and does not control daily operations, while also announcing plans for over $25 billion in datacenter and energy infrastructure investments in Pennsylvania.
Concerns have been raised about potential conflicts of interest when private equity firms own both regulated utilities and companies reliant on them for power, particularly regarding keeping rates affordable for consumers. Blackstone defended its portfolio, pointing to its emissions reduction programs.
Beyond climate risks, private equity investments in energy infrastructure can expose pension funds to other financial hazards. Stonepeak Infrastructure Partners, for example, owns LNG tankers currently affected by the blockade in the Strait of Hormuz, with several state pension funds invested in the firm.
The report also challenged the common private equity assertion that fossil fuel investments consistently yield high returns. An examination of 145 oil and gas-focused private equity funds from 2001-2016 showed investors received only about a 1% return, barely breaking even overall, which falls short of typical private equity expectations.