A “super-polluter” coal plant along the Ohio River is losing money and faces a hefty environmental liability, according to a recent report. Since it’s owned by a politically connected private equity fund, an obvious question arises: Will taxpayers be left holding the bag?
The fund and its CEO are prominent supporters of former President Donald Trump and his running mate, Ohio U.S. Sen. J.D. Vance, who are themselves outspoken supporters of coal. A Vance spokesman didn’t respond when asked last week whether he would work to ensure that the plant’s owners pay to clean up their own mess should they close the plant.
Ohioans have experience propping up unprofitable, polluting plants. As a consequence of the largest bribery scandal in state history, they’ve so far paid $343,000,000 to subsidize two aging coal plants — including one that’s not even in Ohio.
Smoke, soot and coal ash
The Private Equity Stakeholder Project last month issued a report about the Gavin plant in Cheshire along the Ohio River. Bought in 2017 by Blackstone and ArcLight Capital Partners, the 2,600 megawatt plant is the only private equity-owned coal plant in the United States.
Private-equity firms use capital from big investors such as pension funds and the very wealthy to buy assets. As journalists Gretchen Morgenson and Joshua Rosner wrote in their 2023 book “These are the Plunderers,” private-equity firms often employ strategies that enrich them and their investors, but leave devastation in their wake.
They often buy companies, strip assets to recoup their investment and take a profit and then walk away. The book cites a 2019 report by researchers at the California State Polytechnic University that said leveraged buyouts by private-equity firms result in bankruptcies 20% of the time. That’s 10 times the rate of failure in other acquisitions.
Those and other private equity actions have critics questioning why pensions such as the Ohio State Teachers Retirement System are heavily invested in the funds.
“They throw their beneficiaries’ money into high-cost investments rewarding the very same plunderers who fire lower and middle-class workers and diminish government revenue through tax loopholes,” Morgenson and Rosner write. “As such, these pensions are among the chief contributors to the widening wealth gap in the United States, a gulf that harms the very people the pensions are supposed to benefit.”
They also write that private-equity groups often buy into highly polluting industries, such as coal plants. And the Gavin plant is a particular polluter.
The Private Equity Stakeholder report cites another published in 2023 by the Sierra Club, an environmental group. It said the Gavin plant is the deadliest in the United States.
That’s because coal plants spew soot, “a deadly mix of metals, organic chemicals, and acidic substances released into the air we breathe every time we burn fossil fuels,” the Sierra Club said in a statement accompanying its report.
Analyzing weather patterns and premature mortality data, the report said that the Gavin plant pumps out a huge soot plume that generally travels to heavily populated areas in the east. It estimated that the plant’s soot causes 244 premature deaths a year — 25% more than the 195 caused by the Labadie plant in Franklin County, Missouri, the next most deadly.
Blackstone spokeswoman Ellie Gottdenker said Gavin’s owners have invested heavily to make the plant more environmentally friendly.
“The plant has made over $1 billion in investments in the latest air quality control technology for the plant,” she said in an email. “Under our investment, emission control has improved to be best-in-class – Gavin is in the lowest decile in the United States on a CO2 tons per (megawatt hour) basis for large plants of its kind.”
Environmental liabilities
In addition to the plant’s soot plume, the Private Equity Stakeholder Project report says the Gavin plant poses another huge hazard. It said the plant is not compliant with U.S. Environmental Protection Agency rules governing coal ash, a coal byproduct containing toxins such as mercury, cadmium and arsenic.
The ash is so toxic that more than 50 workers who didn’t have proper protective equipment died after cleaning up a massive 2008 spill at the Kingston Fossil Plant, the Tennessee Lookout reported. Another 150 were sickened.
Ohio’s Gavin plant owes more than $40 million in capital costs to become compliant with coal ash rules, the Private Equity Stakeholder report said. And, because of the way its private-equity owners financed the purchase, they have little incentive to pay to fix problems at the plant.
“There’s a private-equity playbook here, with the firm putting a relatively small amount of capital into these projects, making sure they get theirs, and not really worrying about the repercussions of these assets and what they will cost in public dollars at the end of the life” of the plant, the report’s author, Nicole Heil, said in an interview. “We’ve seen private equity walk away either through a sale or a bankruptcy and not be liable for the environmental cleanup.”
Judging from the politicians Blackstone chooses to support, there’s reason to suspect that the firm might want to be exempted from liability. It’s the 10th-largest contributor to Vance’s PAC, Working for Ohio, according to OpenSecrets.com, donating $20,000 since 2019.
And Blackstone CEO Stephen Schwarzman in May endorsed Trump. The former president has long said he supports fossil fuel production, while also making wildly false statements about climate change.
At a rally Saturday in Wilkes-Barre, Pennsylvania, Trump falsely claimed that global warming will cause “the oceans (to) rise one-eighth of an inch in the next 400 years.”
In fact, the National Oceanic and Atmospheric Administration in 2022 predicted that on average, sea levels will rise 10 to 12 inches in the next 30 years — an amount equal to the rise over the entire century of industrial expansion ending in 2020. In other words, sea levels will rise at least 80 times as much as Trump claimed in less than one fourteenth of the time.
If production of greenhouse gasses like those spewed from coal plants is left unaddressed and climate change is unmitigated, the consequences are even more dire. If average daily temperatures rise by 4 degrees celsius, communities like “Al Hudaydah, Yemen, a port city of more than 700,000 people on the Red Sea… can expect more than 300 days when temperatures exceed the limits of human tolerance every year, making it almost uninhabitable,” a Penn State University report said last year.
And as poor communities are rendered uninhabitable, people will flee, adding to the more than 1 billion climate refugees that could be created by 2050.
Denial
Despite those grim facts, Vance, a former believer in climate change, denies its existence now that he’s Trump’s running mate, and wants to stop EPA rules from forcing coal plants to close.
Meanwhile, the Gavin plant’s private-equity owners might have little reason not to walk away from the facility. The fracking boom of the last 20 years has made cleaner-burning natural gas cheaper relative to coal. In addition, Inside Climate News last year reported that wind and solar — which have zero emissions — are cheaper than all but one coal-fired plant in the United States.
It is because of those market dynamics that 2019’s epically corrupt House Bill 6 is forcing Ohio ratepayers to pay hundreds of millions propping up two coal-fired plants, including one in Indiana.
Gottdenker, the Blackstone spokeswoman, rejected the report by the Private Equity Stakeholder group.
“We fundamentally dispute these statements, which are being made by a biased, ideological, anti-private equity group,” she said in an Aug. 9 email that also asked for more time to answer questions from the Capital Journal.
Asked how much more time she needed, Gottdenker didn’t answer.
Ohio Capital Journal is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Ohio Capital Journal maintains editorial independence. Contact Editor David Dewitt for questions: [email protected]. Follow Ohio Capital Journal on Facebook and X.
