Private Equity and Gas Emissions: Evidence from Electric Power Plants

61 Pages Posted: 27 Feb 2023 Last revised: 21 Jan 2025

See all articles by Xuanyu Bai

Xuanyu Bai

University of Oregon - Lundquist College of Business

Youchang Wu

University of Oregon - Lundquist College of Business

Date Written: August 27, 2024

Abstract

Private equity firms’ acquisitions of brown assets are often viewed as an environmental threat. Using data from U.S. fossil fuel power plants, we find that private equity-backed buyouts on average reduce output-scaled CO2 and NOx emissions by 4.2% and 9.0%, respectively. The declines in emission intensities following buyouts backed by non-ESG private equity are almost entirely due to cost-saving improvements in production efficiency. Buyouts backed by pro-ESG private equity not only generate more significant efficiency increases but also reduce input-scaled NOx emissions. Our results show both the strengths and limitations of private equity as a force for sustainability.

Keywords: G11, G20, G23 Private equity, carbon emission, electricity sector, ESG, climate finance

JEL Classification: G11, G20, G23

Suggested Citation

Bai, Xuanyu and Wu, Youchang, Private Equity and Gas Emissions: Evidence from Electric Power Plants (August 27, 2024). Available at SSRN: https://ssrn.com/abstract=4364437 or http://dx.doi.org/10.2139/ssrn.4364437

Xuanyu Bai

University of Oregon - Lundquist College of Business ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

Youchang Wu (Contact Author)

University of Oregon - Lundquist College of Business ( email )

1280 University of Oregon
Eugene, OR 97403
United States

HOME PAGE: http://www.youchangwu.com

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