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.
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. However their energy investments include significant fossil fuel assets including natural gas and coal-fired power plants to provide electricity to datacenters.
The analysis of the top 20 private equity firms invested in global energy infrastructure was conducted by the Private Equity Climate Risks 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.
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. “This industry doesn’t get enough scrutiny and credit for its contribution to global emissions,” Parr said. “It’s a very opaque business model.”
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. Because of gaps in the data, the researchers were unable to calculate how much the 20 private equity firms invested in fossil fuel 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.
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.
The private equity firm EQT has positioned itself as a climate conscious investor, supporting the energy 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. “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. “That’s significantly going to impact their transition. It seems like they’re transitioning to fossil fuels instead of away.”
EQT did not respond to questions from the Guardian about the private equity firm’s fossil fuel investments. ArcLight also declined to comment on the report’s 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. Private equity firms have emerged as the largest datacenter owners outside of big 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. 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. 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.
Blackstone has also announced plans to invest over $25bn to support the buildout of datacenters and energy infrastructure in Pennsylvania. “The electricity infrastructure required to power the AI revolution requires a tremendous amount of 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.
Blackstone-owned QTS had hoped to build a datacenter in NIPSCO territory, but ultimately backed out of the plan after strong community 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.
“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 asked. “It just shows that these private equity datacenter investments are going to be keeping fossil fuel projects alive much longer,” Parr said.
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.
“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.
Private equity investments can also expose pension funds to risks beyond climate pollution.
Stonepeak Infrastructure Partners, for example, owns several LNG tankers that have been stuck behind the blockade in the strait of 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.
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. We are committed to investing in infrastructure that supports a reliable and affordable energy transition.”
Private equity firms have long contended that fossil fuel investments reliably perform well. The Private Equity Climate Risks Consortium looked more closely at that claim, reviewing 145 oil and gas-focused private equity funds with performance data available that began investing between 2001 and 2016. They found that investors contributed a total of $190.4bn to these funds and got $192.9bn back, about 1% more than they had invested.
Those returns fall far short of what investors expect on returns for private equity as a whole, Mendoza said. “We thought it was important to include this because it’s been a pretty strong selling point that oil and gas funds you’re always going to make money on them,” she said. “They’ve barely broken even overall.”