You see oil majors feeling the heat. But private equity is quietly picking up the dregs, perpetuating operations of the least desirable assets. — Alyssa Giachino of the Private Equity Stakeholder Project
You see oil majors feeling the heat. But private equity is quietly picking up the dregs, perpetuating operations of the least desirable assets. — Alyssa Giachino of the Private Equity Stakeholder Project
Private Equity Funds, Sensing Profit in Tumult, Are Propping Up Oil
As the oil and gas industry faces upheaval amid global price gyrations and catastrophic climate change, private equity firms — a class of investors with a hyper focus on maximizing profits — have stepped into the fray.

Since 2010, the private equity industry has invested at least $1.1 trillion into the energy sector — double the combined market value of three of the world’s largest energy companies, Exxon, Chevron and Royal Dutch Shell — according to new research. The overwhelming majority of those investments was in fossil fuels, according to data from Pitchbook, a company that tracks investment, and a new analysis by the Private Equity Stakeholder Project, a nonprofit that pushes for more disclosure about private equity deals.

Only about 12 percent of investment in the energy sector by private equity firms went into renewable power, like solar or wind, since 2010, though those investments have grown at a faster rate, according to Pitchbook data.

Private equity investors are taking advantage of an oil industry facing heat from environmental groups, courts, and even their own shareholders to start shifting away from fossil fuels, the major force behind climate change. As a result, many oil companies have begun shedding some of their dirtiest assets, which have often ended up in the hands of private equity-backed firms.

By bottom-fishing for bargain prices — looking to pick up riskier, less desirable assets on the cheap — the buyers are keeping some of the most polluting wells, coal-burning plants and other inefficient properties in operation. That keeps greenhouse gases pumping into the atmosphere.

At the same time banks, facing their own pressure to cut back on fossil fuel investments, have started to pull back from financing the industry, elevating the role of private equity.

The fossil fuel investments have come at a time when climate experts, as well as the world’s most influential energy organization, the International Energy Agency, say that nations need to more aggressively move away from burning fossil fuels, said Alyssa Giachino of the Private Equity Stakeholder Project.

“You see oil majors feeling the heat,” she said. “But private equity is quietly picking up the dregs, perpetuating operations of the least desirable assets.”


In its report, the Private Equity Stakeholder Project examined the investments made by the top 10 private equity firms since 2010, including giants Blackstone, KKR and Carlyle, and found that about 80 percent, were in oil, gas and coal. That was despite many of those firms touting their sustainable investments.

Private equity firms have emerged as an increasingly powerful, yet secretive, investment force in recent decades. They typically assemble vast pools of money from wealthy or institutional investors in order to invest directly in companies, often those in distress and unable to raise capital in more traditional ways. Because the firms are required to disclose relatively limited information, it can be difficult to get a full view of their holdings or their climate or environmental practices.
Read the full article: https://www.nytimes.com/2021/10/13/climate/private-equity-funds-oil-gas-fossil-fuels.html