Despite pressure from some governments and consumers for a global energy transition, private equity firms continue to invest heavily in some of the world’s largest greenhouse gas emitters. Following the Covid-19 pandemic, several companies, banks, and even energy companies began introducing stronger environmental, social, and governance (ESG) standards, including measures to decarbonise operations. However, just a couple of years later, many companies have backtracked on their ESG goals, and private equity firms are continuing to fund some of the most highly polluting industries.
A recent report found that the portfolios of 20 private equity firms fund companies that produce 1.5 billion tonnes of greenhouse gases a year, which is higher than the annual emissions of any country except China, the United States, India, and Russia. Together, these top firms manage $7.3 trillion in assets, which gives them the potential to shape major global financial decisions. However, their energy investments continue to support fossil fuel development, including oil, gas, and coal.
The Private Equity Climate Risks Consortium conducted a new analysis of the 20 private equity firms that invested in global energy infrastructure and found that, among their assets, the firms owned 15,000 miles of pipelines, 124 GW of power generation capacity across 370 fossil fuel-powered plants, and hundreds of oil and gas fields.
To conduct the analysis, the researchers gathered data from the private markets data provider PitchBook and used information from company websites, press releases, news articles, and regulatory filings. Gaps in the data meant that they could not verify the total quantity the 20 private equity firms had invested in fossil fuel assets. However, a previous PitchBook analysis suggested that private equity funded more than $1.1 trillion in energy assets between 2010 and 2021, the overwhelming majority of which were fossil-fuel assets.
The private equity firms assessed in the analysis included BlackRock, GIP, Energy Capital Partners, EQT, and Kayne Anderson, all of whom, the report suggests, have increased the number of fossil fuel companies in their portfolios since 2024.
In August 2025, S&P Global reported that global private equity and venture capital investments in oil and gas transportation were on track to surpass the previous year’s levels. The oil and gas transportation sector includes crude oil and natural gas pipelines, refined fuel distributors, and shipping companies. Investment in the sector totalled $4 billion across 13 deals between January and August last year, higher than the $3.36 billion recorded across 12 deals in the same period the previous year.
Private equity investment in greenhouse gas-producing industries is expected to continue in line with the artificial intelligence (AI) boom. Several tech companies around the world are developing multiple large-scale data centres, many of which run on natural gas, which is used to power AI and other advanced computing operations. Investment in AI is, therefore, expected to drive up carbon emissions.
Roughly half of the top 10 data centre owners in the United States have been supported by private equity. The communications director for Private Equity Stakeholder, Matt Parr, stated, “This industry doesn’t get enough scrutiny and credit for its contribution to global emissions… It’s a very opaque business model.”
Parr added, “Blackstone is buying some of the companies that utilities do business with. How do regulators manage and track all those different investments while trying to keep rates affordable to ratepayers?” She added, “It just shows that these private equity data centre investments are going to be keeping fossil fuel projects alive much longer.”
Multiple private equity firms have stated aims to avoid fossil fuel investment in the past. However, some appear to be changing their tune. For example, the Swedish global investment organisation EQT, which has positioned itself as a climate-conscious investor that supports the green transition, could soon acquire the energy company AES Corporation even though natural gas continues to account for roughly 32 per cent of AES’s total generation capacity, while coal contributes 16 per cent and oil 2 per cent.
Private equity firms have often argued that fossil fuel investments reliably perform well, as the reason to continue investing in the sector. However, the Private Equity Climate Risks Consortium’s assessment of the claim suggests that this may not be the case. The consortium reviewed 145 oil- and gas-focused private equity funds with available performance data that began investing between 2001 and 2016, finding that investors contributed a total of $190.4 billion to these funds and received $192.9 billion back, a return of just 1 per cent.
Greater scrutiny suggests that private equity may be playing a significant role in supporting the ongoing expansion of the fossil fuel industry, as equity firms continue to fund oil, gas, and coal projects worldwide. This financing contributes to rising greenhouse gas emissions and is at odds with several governments’ aims to undergo an energy transition.
By Felicity Bradstock for Oilprice.com
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