Private equity firms with $3.7 trillion in assets rank among top polluters

In late 2023, The University of Massachusetts Amherst Political Economy Research Institute (PERI) published a list of the top industrial climate, air, and water polluters in the United States. Nine private equity firms rank among the two lists.

Seven private equity firms rank in the Greenhouse 100 Polluters Index. Energy Capital Partners (ranked 7th), and ArcLight Capital Partners (20th) led the pack, followed by Macquarie, while Blackstone and Carlyle make rank on both the Greenhouse Polluters Index and the Toxic 100 Air Rank Index. Together, these nine firms manage a total of over $3.7 trillion in assets on behalf of investors such as pension funds, university endowments, insurance companies, and foundations.

The Greenhouse 100 Polluters Index ranked companies by their emissions based on the EPA’s Greenhouse Gas Reporting Program. The Toxic Air Polluters Index ranked companies by the EPA’s estimate of the total potential chronic human health risk from toxic chemical air pollutants. The indexes were updated using the most recent EPA data, from 2021. 

Energy Capital Partners
Energy Capital Partners (ECP) ranks the highest among its private equity peers and number 7 on the list overall. With $18.54 billion in assets under management (AUM), Wall Street Journal characterized ECP as a firm that “specializes in energy transition and sustainable-energy investments.” However, the Greenhouse 100 index included 46 power plants in Energy Capital Partners’ portfolio, responsible for 43.8 million metric tons (MT) of CO2e in 2021 – equivalent to the emissions from burning 49 billion pounds of coal. ECP was by far the largest private equity investor in U.S. power plants in a May 2022 report by Americans for Financial Reform Education Fund. UK-based private equity firm Bridgepoint is in the process of trying to acquire Energy Capital Partners, though the transaction has faced regulatory hurdles.

ArcLight Capital Partners
ArcLight Capital Partners is one of the most prolific PE investors in energy in North America and co-owner, alongside Blackstone, of one of the dirtiest and deadliest coal plants in the United States, the James M. Gavin coal plant. Of the 44 power plants backed by ArcLight, the Gavin Coal Plant was responsible for 25% of the total emissions (13.48 milllion MT CO2e in 2021) of the firm’s entire power plant portfolio.

Though not incorporated into the index Arclight has been in the news recently due to its ties to a massive oil leak in the Gulf of Mexico. A pipeline owned and operated by Third Coast Infrastructure, an ArcLight-backed company, has been shut down since November 2023 due to an oil leak found to have spilled as much as 1.1 million gallons of crude oil into the Gulf of Mexico off the coast of Louisiana. As of February 2024, repairs to the pipeline have begun while the full investigation into the leak continues.  

Carlyle’s Group
The Carlyle Group was ranked 29th on the Toxic Air Polluters Index, the highest ranking among its peers, due mostly to the substantial number of chemical facilities in its portfolio. According to the index, the Nouryon Surface Chemistry facility in Houston, Texas was responsible for 2,928 pounds of toxic air releases comprised of multiple cancer-causing chemicals and accounts for  91% of the total toxic air score for the firm. The facility is also located in a community with an 83 percent share of racial and ethnic minorities, while the share of the population that identified as Hispanic or nonwhite in the country in that same period was 37%. 

Carlyle also ranked on the Greenhouse Index, with the firm’s power plants being responsible for the vast majority of its emissions used to calculate its score. An April 2023 analysis of Carlyle’s Hidden Climate Impact found that the firm’s 2011-2021 carbon footprint was an estimated 277 million metric tons of CO23, around the same as the “carbon bomb” Willow drilling project in Alaska, The Guardianreported.  

Carlyle’s fossil fuel investments have drawn scrutiny and the firm has been plagued by fundraising troubles; it was only able to raise 54% of its $27 billion goal for its recent flagship buyout fund. 

Other big firms make the lists
KKR, Blackstone, Ares, and Apollo also ranked on the lists and were all highlighted in the new Private Equity Energy Tracker, a searchable list of recent energy holdings of eight of the top North American private equity firms. This new dataset will allow investors, policymakers, regulators, researchers, journalists, and the general public to investigate and better understand the role the private equity industry is playing in the continued production and distribution of fossil fuels.