Another private equity group is in the process of buying a coal-fired generation plant along the Ohio River that is estimated to be the nation’s most deadly via pollution.
The prospective owners boast of a focus on helping fossil fuel plants make the transition to sustainability. But it’s unclear that anything will change at the 50-year-old facility.
Presently owned by Blackstone and ArcLight Capital Partners, the 2,600 megawatt Gavin plant in Cheshire is in the process of being purchased by two other private equity firms, Energy Capital Partners and Javelin. Because the plant is estimated to produce the deadliest emissions in the United States — and because it has a $40 million liability to clean up toxic coal ash — watchdogs are concerned about ongoing health threats. They’re also worried that taxpayers will have to pay for any cleanup.
Private equity groups have long been accused of the most ruthless moneymaking. They often buy assets in deals that quickly recoup their investments, then frequently sell off the most valuable parts of an enterprise, and then walk away either by selling or declaring bankruptcy. Whether people needlessly lose jobs or consumers lose choices is not a consideration, critics say.
Such firms are heavily invested in fossil fuel-powered electricity generation.
Earlier this month, Private Equity Climate Risks — a consortium of clean-energy advocates — published a scorecard. It said the annual emissions of private-equity owned fossil fuel plants exceed those of the global airline industry and is on a scale with the catastrophic Canadian wildfires of 2023.
Ohio’s Gavin Plant is a particular polluter.
A 2023 analysis by the Sierra Club looked at coal-plant emissions and weather patterns. It concluded that because it sends a plume of toxins over populous areas in the eastern United States, the Gavin plant is the deadliest in the country, killing an estimated 244 people a year.
Blackstone, one of its current owners, has ties to the Republican presidential ticket. CEO Stephen Schwarzman in May endorsed former President Donald Trump, and it’s the 10th-largest contributor to Ohio Sen. J.D. Vance’s PAC, Working for Ohio, according to OpenSecrets.com.
Blackstone in August disputed critics’ assertions that it was seeking political influence to avoid compensating for the harms caused by the plant. To the contrary, it said it had spent $1 billion on air quality improvements.
But now that it appears poised to be sold to yet another private-equity group, critics continue to worry that the Gavin Plant will keep on spewing toxins and that its $40 million coal-ash problem will go unaddressed.
“I think we’ve seen over the past several years how unpopular and deadly coal is,” said Alissa Jean Schafer, climate director of the Private Equity Stakeholder Project, a group critical of private equity practices. “You’ve certainly had a front-row seat to that in Ohio. Increasingly, coal is being seen as, A) a really bad investment, and B) a poisonous form of energy.”
Indeed, companies are retiring coal-fired power plants or converting them to cleaner natural gas even faster than the federal government estimates, the Institute for Energy Economics and Financial Analysis reported on Tuesday.
According to its research, 69,000 megawatts of coal generation will be retired or converted between 2025 and 2030 — nearly double the 36,000 megawatts estimated by the U.S. Energy Information Administration in September.
“Blackstone wasn’t completely able to ignore that, so Blackstone now is following the typical (private equity) playbook where they swooped in, took (the Gavin Plant), tried to see what profit they could get out of it, didn’t respond to any of the pressure to retire the plant or invest in a clean-energy transition,” Schafer said. “Now Blackstone is passing the buck to the next firm. We’ll see what (Energy Capital Partners) does with it.”
Schafer 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 deal and its timeline for the deal to close are unknown.
On its website, Energy Capital Partners says it focuses on converting facilities to cleaner generation.
“Energy Capital Partners (ECP) is a leading credit and equity investor across energy transition infrastructure, with a focus on investing in electricity and sustainability infrastructure, providing reliable, affordable clean energy,” it says.
However, the firm didn’t respond when asked whether it planned to convert or retire Gavin, or what might be done about the plant’s coal ash.
The scorecard published earlier this month by Private Equity Climate Risks said that ECP is invested in 14 energy companies and that 64% of them have fossil fuel generation. The consortium — which includes the Private Equity Stakeholders Project — gave ECP a grade of C when it comes to such things as transparency in disclosing emissions and political spending, having a clear plan to transition to clean energy, and plans to do its part to meet the global goal of limiting global warming to 1.5 degrees celsius by the end of the century.
One of the major critiques of private equity firms is that they use average people’s money to invest in things like fossil fuels that harm those same people. That’s so, the argument goes, because much of the money comes from institutional investors such as public pension funds.
According to data used in the Private Equity Climate Risks scorecard, at least six of Ohio’s public pensions are invested in private equity funds that support fossil fuels. By far the biggest investor is the State Teachers Retirement System at nearly $1.3 billion.
Already under fire for paltry benefit increases, big staff bonuses and high-fee “alternative” investments, the pension system is invested in at least three private equity funds that support coal or natural gas:
- $812 million with Ares Management, which owns 14 fossil fuel companies that spew 55 million tons of carbon dioxide equivalents each year. The scorecard gave it a grade of C, when it comes to meeting climate and transparency goals.
- $450 million with Apollo Global Management, which owns three fossil fuel companies that emit 3.5M tons of carbon dioxide equivalents. It received a grade of B.
- $10 million with EnCap Investments. It’s invested in 34 fossil fuel companies that emit 92 million carbon dioxide equivalents a year. It received a D grade on the Private Equity Climate Risks scorecard.
At least one official is trying to end investments by public pensions in fossil fuels. On Tuesday, New York City Comptroller Brad Lander proposed ending investments by city employee pensions in fossil fuel infrastructure.
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