Another private equity group is in the process of purchasing a coal-fired power plant on the Ohio River that is estimated to be the nation’s deadliest pollution power plant.
Prospective owners boast that they are focused on helping fossil fuel plants become sustainable. However, it is not clear whether anything will change in the 50-year-old facility.
Currently owned Blackstone and ArcLight Capital Partners’ 2,600MW Gavin power station in Cheshire is in the process of being purchased by two other private equity firms, Energy Capital Partners and Javelin. Because the plant is it is estimated to produce the deadliest emissions in the United States — and because it has a $40 million bond to neat up toxic coal ash — regulators are concerned about ongoing health risks. They also fear that taxpayers will have to pay for any cleanup.
Private equity groups have long been most accused ruthless money making. They often buy assets in transactions that quickly recoup their investment, then often sell the most valuable parts of the business, and then walk away by selling or declaring bankruptcy. Whether people lose their jobs unnecessarily or consumers lose their choice is not taken into account– say critics.
Such companies invest heavily in generating electricity from fossil fuels.
Earlier this month, Private Equity Climate Risks – a consortium of neat energy advocates – published the scorecard. It found that annual emissions from privately owned fossil fuel power plants exceed those of the global aviation industry and are on a scale equivalent to a catastrophic Wildfires in Canada in 2023.
A particular source of pollution is the Gavin plant in Ohio.
The Sierra Club’s 2023 analysis looked at emissions from coal-fired power plants and weather patterns. The Gavina plant was found to be a major source of toxins, spreading to populated areas in the eastern United States. the deadliest in the countrykilling approximately 244 people per year.
Blackstone, one of its current owners, has ties to the Republican presidential ticket. CEO Stephen Schwarzman in May supported former president Donald Trumpand that’s it 10th largest donor to Ohio Sen. J.D. Vance’s PAC, according to OpenSecrets.com.
In August, Blackstone disputed critics’ claims that it was seeking political influence to avoid compensating for damage caused by the plant. On the contrary, he said yes spent $1 billion on improving air quality.
But now that it appears likely to be sold to another private equity group, critics remain concerned that the Gavin plant will continue to release toxins and the $40 million coal ash problem will remain unresolved.
“I think we’ve seen over the last few years how unpopular and deadly coal is,” said Alissa Jean Schaeffer, climate director at the Private Equity Stakeholder Project, a group critical of private equity practices. “You certainly had a front row seat at this event in Ohio. Increasingly, coal is viewed as A) a really bad investment and B) a poisonous form of energy.”
Indeed, companies are phasing out coal plants or converting them to cleaner natural gas even faster than the federal government estimates, the Institute for Energy Economics and Financial Analysis reported Tuesday.
According to his research, between 2025 and 2030, 69,000 megawatts generated by coal-fired power plants will be retired or converted – almost double the 36,000 megawatts estimated in September by the U.S. Energy Information Administration.
“Blackstone wasn’t able to ignore it completely, so Blackstone is now following the typical (private equity) pattern where they came in, took over (the Gavin plant), tried to see what profit they could make from it, but did not respond to any pressure to close a plant or invest in a neat energy transition,” Schaeffer said. “Now Blackstone is handing over the responsibility to another company. We’ll see what (Energy Capital Partners) does with it.”
Schaeffer and her colleagues at the Private Equity Stakeholders Project said the sale of the Gavin plant is under consideration by the Federal Energy Regulatory Commission, and details of the transaction and timeline for completion are unknown.
On its website, Energy Capital Partners says it is focused on transforming facilities into sources of cleaner generation.
“Energy Capital Partners (ECP) is a leading credit and equity investor in energy transition infrastructure, focused on investments in electricity and sustainable infrastructure that deliver reliable and affordable clean energy,” it says.
However, the company did not respond to questions about whether it plans to convert or retire Gavin or what might be done with the coal ash emanating from the plant.
Scorecard published earlier this month by Private equity organization Climate Risks found that ECP invests in 14 energy companies and 64% of them are involved in fossil fuel production. The consortium – which includes a project for private equity stakeholders – gave ECP a C rating for things like transparency in disclosing emissions and political spending, having a clear plan for the neat energy transition, and plans to do its part to meet the global goal limiting global warming to 1.5 degrees Celsius until the end of the century.
One of the main criticisms of private equity firms is that they exploit average people’s money to invest in things like fossil fuels that harm those same people. This is true, the argument goes, because most of the money comes from institutional investors such as public pension funds.
At least six public pensions in Ohio are invested in private equity funds that support fossil fuels, according to data used in the Private Equity Climate Risks Scorecard. By far the largest investor is the State Teachers’ Retirement System, worth almost $1.3 billion.
Already under fire paltry benefit increases, vast employee bonuses and high “alternative” investment fees, the pension system is invested in at least three private equity funds supporting coal or natural gas:
- $812 million to Ares Management, which owns 14 fossil fuel companies that dump 55 million tons of carbon dioxide equivalent each year. The scorecard gave it a grade of C for meeting climate and transparency targets.
- $450 million to Apollo Global Management, which owns three fossil fuel companies that emit 3.5 million tons of carbon dioxide equivalent. She received a B grade.
- $10 million thanks to EnCap Investments. It invests in 34 fossil fuel companies that emit 92 million carbon dioxide equivalents annually. It received a grade of D on Private equity climate risk scorecard.
At least one official is trying to end fossil fuel investments in the form of public pensions. New York City Controller Brad Lander proposed on Tuesday ending municipal retirement workers’ investment in fossil fuel infrastructure.
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