‘The Biggest Oil Barons’: US Private Equity Firms Funding Dirty Energy Projects | Climate crisis

US private equity moguls are profiting from the global climate crisis by investing in fossil fuels that generate greenhouse gas emissions, a new investigation reveals.

Oil and gas pipelines, coal-fired power plants and offshore drilling sites linked to Indigenous land violations, toxic leaks and deadly air pollution are among the dirty energy projects funded by some of the biggest private equity firms. country’s investment, according to a survey conducted by the non-responsibility of companies. benefits from LittleSis and the Private Equity Stakeholder Project (Pesp).

Private equity refers to an opaque form of financing away from public markets in which funds and investors buy and restructure businesses, including startups, struggling businesses, and real estate.

Globally, the industry manages over $7 billion for high net worth individuals and institutional investors such as mutuals, hedge funds, endowments and pensions, investing across all sectors, from retail and health to prisons and weapons.

Some of that money funds fossil fuel projects that release greenhouse gases that cause global warming. Higher air and ocean temperatures are directly linked to increases in catastrophic weather events such as drought, extreme temperatures and hurricanes.

Yet, unlike banks and other publicly traded companies, private equity is exempt from most financial disclosure rules, making it extremely difficult to track their assets.

This means people like firefighters and teachers whose pension funds are invested in private equity funds have little way of knowing whether their retirement nest egg is funding coal-fired power plants, oil wells or solar farms. .

The Private Equity Dirty Dozen report, shared exclusively with the Guardian, provides insight into industry involvement in some of the country’s most controversial fossil fuel investments, as well as the deep political and cultural ties of its wealthy leaders. The investigation revealed:

  • The Carlyle Group, one of the world’s largest private equity firms, owns dozens of oil and gas companies, including a stake in NGP Energy Capital, which has its own major portfolio primarily focused on fracking and drilling in states such as Texas, Wyoming and Colorado. Carlyle, which recently announced a goal of net zero emissions by 2050, is also partnering with Hilcorp Energy — a major methane emitter with a history of offshore spills in Alaska and the Gulf of Mexico — on at least $4 billion in stock and debt. (Methane is more than 25 times more potent than carbon dioxide to trap heat in the atmosphere and accounts for about a quarter of current global warming.)

Carlyle Group
  • Kohlberg Kravis Roberts & Co (KKR) owns a majority stake in Canada’s Coastal Gaslink Pipeline, a 400-mile, multi-billion dollar infrastructure project through unceded Indigenous territories that will transport fractured gas to a Pacific Coast port for export to the ‘Asia. Police deployed to evict protests and blockades organized by Hereditary Chiefs of the Wet’suwet’en Nation. Co-founder Henry Kravis is a major Republican donor, donating $1 million to Trump’s Inauguration Fund in 2017.

Kravis
  • Daniel Reverse is the managing partner and founder of ArcLight Capital Partners, a leading energy-focused private equity firm, which accompanied Trump to China in 2017 – reportedly to help recruit investors for a disastrous oil refinery. environment in the US Virgin Islands. Last year, the EPA enacted emergency powers to shut down the Limetree Bay oil refinery after multiple toxic leaks led to school closures and adverse health effects in majority-black communities. This was followed by a DoJ complaint alleging the refinery posed an imminent threat to public health and the environment, before Limetree filed for bankruptcy.

Reverse integration
  • Richard Kayne is a major Republican donor and co-founder of Kayne Anderson Capital Advisors, the largest investor in energy pipelines in America. Kayne had a stake in the world’s fifth-largest oil pipeline developer, the Plains All American Pipeline, when he was fined $60 million for spilling 140,000 gallons of crude oil into the Pacific and the California coast in 2015 – the state’s worst oil spill in 25 years. (The company sold its shares in 2021 but still has a seat on the board.)

The findings renewed calls for greater transparency in the booming private equity industry, so communities bearing the brunt of toxic emissions and extreme weather can track the money behind the misery.

“By pouring money into dirty coal-fired power plants, offshore drilling and deforestation, private equity threatens to undermine our hard work to fight the climate crisis and advance environmental justice,” said Elizabeth Warren. , former presidential candidate and member of the Senate Banking Committee. “This is just another page in the standard private equity playbook: increasing short-term profits at the expense of the long-term well-being of communities.”

Alyssa Giachino, director of climate at Pesp and co-author of the report, said: “While communities have borne the damages of fossil fuel investments, private equity firms have built vast wealth. Many companies have embraced a rhetoric around sustainability, but have yet to be transparent about their holdings and impacts. »

A KKR spokesperson said the company “totally disagrees” with the report’s claims. “Not only do we believe – and our actions support – the need for a sustainable energy transition, but we also believe in the value and importance of transparency, as evidenced by an extensive library of public disclosures, including our Climate Action Report and Accounting Standards Board Report on Sustainability [among others].”

Private equity firms have spawned an elite group of super-rich power brokers with strong ties to politics, the arts, sports and education.

In recent years, banks have come under increasing criticism for funding fossil fuel projects, while secrecy surrounding private equity has shielded the industry from the same scrutiny.

Yet in 2020, public institutions such as public pension funds and sovereign wealth funds have invested 22% of trillions in their private equity portfolios where, unlike the stock markets, only wealthy and institutional investors have direct access to this capital.

The nature of these investments, let alone their impacts, is notoriously difficult to track, even though, according to financial data analysts PitchBook, there have been at least $1.1 billion in energy private equity deals in the world since 2010.

It’s no secret that the oil and gas industry spends big on politics, contributing more than $700 million through individual, Pac and outside donations since 2000. according to Open Secrets. Over 80% of campaign contributions went to Republican coffers.

But the financial sector is by far the largest source of campaign contributions to federal candidates and parties.

Stephen Schwarzman, chief executive and founder of Blackstone Group and 34th richest man in the world according to Forbes, is a major Republican donor who has personally contributed to Donald Trump, Mitch McConnell and former Georgia Senator Kelly Loeffler who supported the cancellation of the 2020 presidential outcome. (Schwarzman acknowledged Biden’s victory and condemned the Jan. 6 insurrection.)

Blackstone, the world’s largest private equity firm that manages $731 billion in assets, is a co-owner (with ArcLight) of one of America’s dirtiest coal plants, the General James Gavin Power Plant in Ohio. Blackstone also has a large stake in pipeline owner Dakota Access – the oil infrastructure project that sparked the Standing Rock protest camp where Indigenous water protectors were brutalized by law enforcement.

A spokesperson said: “Virtually none of the capital invested by Blackstone over the past three years has gone into fossil fuel exploration and production. We have simultaneously invested more than 15 billion dollars in projects that we believe are consistent with the energy transition. The company does not make corporate donations.

Democratic candidates have also benefited from fossil fuel investors. Adebayo Ogunlesi, founder and managing partner of Global Infrastructure Partners (GIP), donated to Barack Obama and Joe Manchin, the coal-friendly West Virginia senator who is currently blocking Biden’s climate spending bill, Build Back Better.

Ogunlesi oversees $79 billion in assets, with more than half of the firm’s portfolio in energy investments, according to market data. GIP is part of a consortium that in 2020 bought a 49% stake in infrastructure from Abu Dhabi’s national oil company, in a deal worth $10 billion that gives them gas pipeline lease rights for the next 20 years.

Ogunlesi, who is the senior director of Goldman Sachs and has served on various Harvard University boards, served alongside Blackstone’s Schwarzman on Trump’s business advisory board, which was dropped after the he former president described white supremacist protesters in Charlottesville as “very good people”.

The report details the symbiotic relationships between ultra-wealthy private equity executives and the rest of America’s elite, like Carlyle co-founder David Rubenstein, whose net worth is estimated at $4.6 billion and sits on the board of several influential arts and think tanks.

“It’s a big deal that ultra-wealthy private equity executives can use their wealth to intrude on the boards of the most prestigious universities, cultural institutions and think tanks,” Derek said. Seidman, researcher at LittleSis and co-author of the report. “It helps them to restore their public reputation in a way that obscures the fact that they are, in fact, some of the biggest oil barons in the world.”

ArcLight, GIP, Carlyle and Kayne Anderson did not respond to requests for comment.

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