Wall Street’s “Energy Transition” Funds Are Packed With Natural Gas

As we head into the United Nations’ 31st annual flagship climate conference (COP31), to be held next week in Antalya, Türkiye, greenwashing presents a large and growing problem in the private sector. As the tech sector’s greenhouse gas emissions explode against the backdrop of the artificial intelligence boom and the clean energy incentives dry up under the Trump administration, Big Tech and Wall Street alike are funding a boom in natural gas, all under the guise of funding the future of clean energy.“On Wall Street, the ‘energy transition’ includes natural gas and data centers,” blared a Grist headline published earlier this week. The article details how private equity funds are making a killing on “energy transition” funds as electrification takes hold on a global scale and solar and wind power continue to see runaway growth trends, both current and projected. But many of these prominent energy transition funds prominently feature a fossil fuel and major contributors to greenhouse gas emissions on a global scale: natural gas.“‘Energy transition’ is a flexible term,” says Dan Cohn, an energy finance analyst with the energy think tank Institute for Energy Economics and Financial Analysis. “And I’m unsurprised to see either the gas or electrical equipment and data center-related companies in some of these funds. That is perfectly consistent with how I know some investors think about the energy transition,” he went on to say.And those investors are not alone. Natural gas has been heavily promoted by the fossil fuel sector as a ‘bridge fuel’, serving as a stepping stone in the transition away from oil and coal toward 100 percent renewables. However, environmental experts question the wisdom of this approach and scientists have pushed back on the idea that natural gas is any cleaner than other fossil fuels, and calls for the abandonment of the ‘bridge fuel’ narrative have gained momentum in recent years. Methane, the principal ingredient in natural gas, is an extremely potent greenhouse gas. While methane breaks up much more quickly in the atmosphere than the better-known carbon dioxide, it is 80 times more potent at warming over a 20-year period. And peer–reviewed studies (like this one, this one, and this one) are increasingly indicating that natural gas produces much, much more methane over its life cycle than previously thought. Plus, some studies even indicate that natural gas could be worse for the climate than coal when you include the emissions associated with the energy-intensive cooling, storage, and shipping processes associated with liquefied natural gas.However, the ‘bridge fuel’ argument still seems to hold major currency on Wall Street and in Silicon Valley. “I know a lot of the investors out there do consider gas a transition fuel,” Ryan Loughead, a senior associate and former climate solutions analyst for BloombergNEF, told Grist. For example, New York-based Blackstone, one of the world’s largest private equity firms, “is explicit in its view that methane gas, a fossil fuel and the primary component of natural gas, is essential to the energy transition,” reports Grist. Meanwhile, Big Tech firms are causing a major natural gas boom around the country at the same time that they tout their backing of next-gen clean energy research, development, and adoption. Some of the biggest names in tech are building historically huge natural gas plants as we speak. Amazon is constructing a gas-fired power plant in Texas that will be the single-biggest source of power-related emissions in the entire United States according to current specs, which include seven gas plants. And in August, Nvidia announced that it would partner with Japan’s SoftBank and the federal government to build the largest fossil-fuel plant in the United States to power an Ohio project by OpenAI, the firm behind ChatGPT. And Microsoft just signed a 20-year deal with Chevron to provide 2.67 gigawatts of natural-gas fired power for a proposed West Texas data center.Together, these developments greatly imperil the world’s ability to keep global warming within manageable limits. The United Nations says that it is now an inevitability that the world will fail to meet the legally binding goals set forth by the Paris climate accord as a result of “decades of insufficient climate action”, but notes that here is “ample opportunity to accelerate action”, and concludes that “countries can still limit peak warming, shorten the duration of overshoot and keep the goals of the Paris Agreement within reach”. Removing natural gas as a pillar of transition agendas and portfolios is clearly one such opportunity.By Haley Zaremba for Oilprice.comMore Top Reads From Oilprice.comEurope's Grid Spending Is Up 155% Since 2019Energy Aspects Slashes Forecast of China’s November Diesel ExportsAmerica’s Nuclear Revival Is Running Into a Fuel Supply Wall