Private equity firms see opportunity in oil, gas, coal

Reports that private equity firms are buying up oil wells and coal mines may raise eyebrows among those who have watched the impact of private money on newspapers, senior care, and health care.

Private equity has invested more than $1 trillion in the energy industry since 2010, according to the Private Equity Stakeholder Project. The trend is driven by the shift toward green technologies, which is leading publicly traded companies to rid themselves of problematic assets.

“Public investors like mutual funds, hedge funds, university endowments, pension funds — they are actively shifting away from fossil fuels,” said Pavel Molchanov, managing director of renewable energy and clean technology at Raymond James, a financial services firm. “As public investors are divesting fossil fuels, someone’s buying it. They’re not disappearing into thin air.”

Privately held companies are, by definition, less transparent than publicly traded firms. As a result, they are insulated from some of the pressure from investors that public companies face.

Critics fear that private firms will operate the fossil fuel assets, which contribute to climate change, beyond the time a publicly traded company would. And they fear an increased risk of the wells being abandoned — adding to the million-plus abandoned, uncapped wells that can pollute groundwater as well as emit harmful chemicals into the atmosphere.
 

Inside Climate News: With Fossil Fuel Companies Facing Pressure to Reduce Carbon Emissions, Private Equity Is Buying Up Their Aging Oil, Gas and Coal Assets

The New York Times (Oct. 13, 2021): Private Equity Funds Have Invested Billions In Fossil Fuels Since 2010