Wall Street’s Energy Transition Funds Include Natural Gas

Grist reported that private equity funds described as energy-transition investments include gas companies and businesses tied to electrical equipment and data centers. Dan Cohn, an energy finance analyst at the Institute for Energy Economics and Financial Analysis, called the term “flexible” and said such holdings fit how some investors view the transition. Ryan Loughead, a senior associate and former climate solutions analyst for BloombergNEF, also told Grist that many investors consider gas a transition fuel. Blackstone, the New York-based private equity firm, says methane gas is essential to the energy transition, according to the report.

The fossil fuel industry has promoted natural gas as a “bridge fuel” between oil and coal and renewable energy. Environmental experts challenge that case. Methane, the main component of natural gas, has about 80 times the warming impact of carbon dioxide over a 20-year period, according to the source. It also cites peer-reviewed research suggesting that gas releases more methane over its life cycle than previously estimated, and that liquefied natural gas could have a greater climate impact than coal when cooling, storage and shipping emissions are included.

Technology companies’ power demands are adding to gas development. Amazon is building a gas-fired plant in Texas that, under current plans for seven gas plants, would be the largest source of power-related emissions in the United States, the article says. In August, Nvidia announced a partnership with SoftBank and the federal government on what the source describes as the country’s largest fossil-fuel plant, intended to power an OpenAI project in Ohio. Microsoft has signed a 20-year agreement with Chevron for 2.67 gigawatts of gas-fired power for a proposed West Texas data center.

The United Nations says the world is now certain to miss the Paris Agreement’s legally binding goals, citing decades of insufficient climate action, but says countries can still limit peak warming and keep those goals within reach. The article argues that removing natural gas from transition plans and investment portfolios is one way to accelerate action.