A “super-polluter” coal-fired power plant on the Ohio River is making losses and facing major environmental liabilities, a recent report shows. Since it is owned by a politically well-connected private equity fund, the question is: Will taxpayers be left to foot the bill?
The fund and its CEO are prominent backers of former President Donald Trump and his running mate, Ohio U.S. Senator J.D. Vance, who are themselves outspoken coal advocates. A spokesman for Vance did not respond when asked last week whether he would advocate for the plant’s owners to pay for cleaning up their own mess if they close the plant.
Ohioans have experience maintaining unprofitable, environmentally harmful facilities. biggest bribery scandal in the history of the stateyou have paid so far 343,000,000 USD to subsidize two aging coal-fired power plants – including one that isn’t even in Ohio.
Smoke, soot and coal ash
The Private Equity Stakeholder Project published last month a report about the Gavin Power Plant in Cheshire on the Ohio River. Purchased by Blackstone and ArcLight Capital Partners in 2017, the 2,600-megawatt plant is the only privately owned coal-fired power plant in the United States.
Private equity firms use capital from large investors such as pension funds and very wealthy individuals to buy assets. As journalists Gretchen Morgenson and Joshua Rosner explain in their 2023 book “These are the looters“Private equity firms often employ strategies that make them and their investors rich, but leave behind devastating consequences.
They often buy companies, sell assets to recoup their investment and make a profit, and then walk away. The book cites a report by researchers at the According to California State Polytechnic University, leveraged buyouts by private equity firms end in bankruptcy in 20 percent of cases. That’s ten times more than other takeovers.
These and other private equity moves have led critics to question why pension funds like the Ohio State Teachers Retirement System invest so heavily in these funds.
“They pour their recipients’ money into expensive investments, rewarding the very looters who lay off lower- and middle-class workers and reduce government revenues through tax loopholes,” Morgenson and Rosner write. “As a result, these pensions are a major contributor to the growing wealth gap in the United States, a gap that harms the very people they are supposed to benefit.”
You also write that private equity groups often invest in industries that have a high environmental impact, such as coal-fired power plants. And the Gavin power plant is a particularly polluting player.
The Private Equity Stakeholder report cites another report published in 2023 by the environmental group Sierra Club, which states that the Gavin plant is the deadliest in the United States.
This is because coal-fired power plants emit soot.“A deadly mix of metals, organic chemicals and acidic substances is released into the air we breathe every time we burn fossil fuels,” the Sierra Club said in a statement accompanying its report.
The report analyzed weather patterns and data on premature deaths and found that the Gavin Power Plant emits a huge cloud of soot that tends to drift toward densely populated areas in the east. The report estimates that the plant’s soot causes 244 premature deaths per year — 25 percent more than the 195 deaths at the Labadie Power Plant in Franklin County, Missouri, which has the second-highest death rate.
Spokesperson for Blackstone Ellie Gottdenker said Gavin’s owners had invested heavily to make the plant more environmentally friendly.
“The plant has invested over a billion dollars in the latest air quality control technology for the plant,” she said in an email. “Thanks to our investments, emissions control has improved to a level that is best in its class – Gavin is in the bottom decile in the U.S. for large plants of its type in terms of CO2 tons per (megawatt hour).”
Environmental liability
In addition to the plant’s soot cloud, the Gavin plant poses another major hazard, according to the report by the Private Equity Stakeholder Project. It says the plant does not comply with the US Environmental Protection Agency’s regulations for coal ash, a byproduct of coal that contains toxins such as Mercury, cadmium and arsenic.
The ash is so toxic that more than 50 workers who were not wearing proper protective equipment died while cleaning up a massive ash spill at the Kingston Fossil Plant in 2008. the Tennessee Lookout reported. Another 150 became ill.
The Gavin power plant in Ohio will have to raise more than $40 million in capital costs to comply with coal ash regulations, according to the report from Private Equity Stakeholder. And because of the way the 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: Firms put relatively little capital into these projects, make sure they get their money, and don’t worry much about the impact of these assets and what they’re going to cost in public money at the end of the life of the power plant,” report author Nicole Heil said in an interview. “We’ve seen private equity exit either through a sale or bankruptcy and not be held liable for environmental cleanup.”
Considering the politicians Blackstone supports, there is reason to believe that the company wants to be exempt from liability. Tenth largest contributor to Vance’s PAC, Working for Ohio, which has donated $20,000 since 2019, according to OpenSecrets.com.
And Blackstone CEO Stephen Schwarzman in May supported Trump. The former president has long said he supports fossil fuel production, but at the same time makes completely false claims about climate change.
At a rally in Wilkes-Barre, Pennsylvania, on Saturday, Trump falsely claimed that global warming would cause “sea levels to rise one-eighth of an inch over the next 400 years.”
In fact, the National Oceanic and Atmospheric Administration predicted in 2022 that sea levels would rise on average Rise of 10 to 12 inches in the next 30 years – an amount equivalent to the rise during the entire century of industrial expansion up to 2020. In other words, sea levels will rise at least 80 times as much as Trump claims in less than a fourteenth of the time.
If the production of greenhouse gases emitted by coal-fired power plants is not addressed and climate change continues unabated, the consequences will be even worse. If average daily temperatures rise by 4 degrees Celsius, communities like “Al Hudaydah, Yemen, a port city of more than 700,000 inhabitants on the Red Sea… expected more than 300 days a year when temperatures exceed the limits of human tolerancemaking it almost uninhabitable,” said a Penn State University report last year.
And as poor communities are made uninhabitable, people will flee, which will affect the more than 1 billion climate refugees that could be created by 2050.
refusal
Despite these grim facts, Vance, who once believed in climate change, denies his existence now that he is Trump’s running mateand wants to prevent coal-fired power plants from having to close due to EPA regulations.
Meanwhile, the private equity owners of the Gavin plant may have little reason not to abandon the plant. The fracking boom of the last 20 years has made cleaner natural gas cheaper than coal. In addition, Inside Climate News reported last year that wind and solar power – which produce no emissions – cheaper than all coal-fired power plants except one in the United States.
Because of these market dynamics, the epically corrupt House Bill 6 of 2019 forces Ohio taxpayers to pay Hundreds of millions to support two coal-fired power plantsincluding one in Indiana.
Gottdenker, the Blackstone spokeswoman, rejected the Private Equity Stakeholder Group’s report.
“We fundamentally dispute these statements, which are made by a biased, ideological and anti-private equity group,” she said in an Aug. 9 email, while also asking for more time to answer questions from Capital Journal.
When asked how much more time she needed, Gottdenker did not answer.
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