Private equity firms' energy assets emit 1.5 billion tons of greenhouse gas a year

PE capital increasingly funds both fossil fuel buildout and AI datacenter growth

The energy assets of 20 private equity firms emit 1.5 billion tons of greenhouse gases a year — more than the annual emissions of any country except China, the United States, India and Russia — according to an analysis published by the Private Equity Climate Risks Consortium. Together, the firms manage $7.3 trillion 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 findings come as utilities and private capital race to build electricity infrastructure to power artificial intelligence, and as five of the named firms — BlackRock, GIP, Energy Capital Partners, EQT and Kayne Anderson — have increased their fossil fuel holdings since 2024, even as EQT, one of them, has publicly positioned itself as a climate-conscious investor.

The Private Equity Climate Risks Consortium, a coalition that includes the Private Equity Stakeholder Project (PESP), analyzed energy holdings across the top 20 private equity firms invested in global energy infrastructure. It found those firms own 15,000 miles of pipelines, 124 gigawatts of power generation capacity across 370 fossil fuel-powered plants, and hundreds of oil and gas fields.

“This industry doesn’t get enough scrutiny and credit for its contribution to global emissions,” said Matt Parr, communications director for PESP. “It’s a very opaque business model.”

The research team queried energy holdings using 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 exactly how much the 20 firms had invested in fossil fuel assets. But an earlier PitchBook-based analysis shows private equity has funded more than $1 trillion in fossil fuel assets since 2010, said Amanda Mendoza, a senior research and campaign coordinator on PESP’s climate team.

While some public-sector retirement systems have tried to limit their exposure to fossil fuel projects, the firms BlackRock, GIP, Energy Capital Partners, EQT and Kayne Anderson each held more fossil fuel companies in their portfolios than they did in 2024, according to the report. EQT, which has publicly positioned itself as a climate-conscious investor, is among the bidders for AES Corporation along with BlackRock’s GIP and the California Public Employees’ Retirement System, a deal that could add more than 20 power plants to the bidders’ holdings.

“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 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 industry bet: the buildout of datacenters to support artificial intelligence. Private equity firms have emerged as the largest datacenter owners outside of big tech, the consortium found. Half of the top 10 US datacenter owners are backed by private equity, said Parr.

In June 2024, Blackstone invested $2.16 billion 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 megawatt natural gas power plant to serve datacenters — a facility 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 more than $25 billion 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,” Blackstone managing directors Bilal Khan and Mark Zhu said in announcing the firm’s acquisition of a Pennsylvania gas plant last year. “We are proud to make our latest investment in this sector — which is among our highest conviction investment themes — in Western Pennsylvania.”

Blackstone-owned QTS had hoped to build a datacenter in NIPSCO’s territory, but ultimately backed out of the plan after strong community opposition. That 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, also a senior research and campaign coordinator on PESP’s climate team.

“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 added.

Blackstone did not 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 in a statement.

Private equity investments can also expose pension funds to risks beyond climate pollution. Stonepeak Infrastructure Partners owns several LNG tankers that have been stuck behind the blockade in the strait of Hormuz. Several state pensions — including Maryland state retirement and pension system, Virginia retirement system and New York state common retirement fund — are invested in Stonepeak. 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.”

The consortium also reviewed the financial performance of 145 oil and gas-focused private equity funds with performance data available that began investing between 2001 and 2016. Investors contributed a total of $190.4 billion to those funds and received $192.9 billion back — about 1% more than they put in.

Those returns fall far short of what investors typically expect from 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.”