On March 21, Europe’s largest proposed liquefied natural gas (LNG) import terminal – the Stade LNG onshore terminal – received its final investment decision (1). The terminal, which will receive fracked gas from the United States (2), is backed by Swiss private equity (PE) firm Partners Group, one of the largest PE firms in Europe. In total, five LNG import terminals under construction or planned in the European Union (EU) are backed by PE firms (3). Contrary to the discourse of their proponents, these terminals are not necessary to meet the region’s energy needs. In fact, there is a huge gap between the continent’s LNG expansion plans and projected LNG demand. Instead, these LNG terminals threaten the EU’s target of reducing greenhouse gas emissions by at least 55% by 2030 by locking the region into fossil fuels. Moreover, these projects may pose risks to investors in the funds managed by these PE firms.<\/p>\n<\/div>
Put simply, PE firms are characterized by investing in companies that are not publicly traded (listed in the public markets). <\/span>The PE industry has yet to adopt sectoral policies restricting investments in fossil fuels<\/a><\/span>. As a result, PE firms typically have no criteria that would prevent them from investing in LNG expansion. But even with this information, the PE industry’s fundamental role in LNG development can be surprising. While this issue is perhaps better understood in the United States, where the LNG boom began several years ago (4), it is largely unknown in Europe.<\/span>\u00a0<\/span><\/p>\n Research on the ownership of companies active in LNG expansion in the European Union shows that five LNG terminals, representing 23% of the total regasification capacity under construction and planned, are being developed by companies significantly controlled by PE firms, namely Partners Group, F2i, Asterion, IFM Investors and Macquarie Group (5). These PE firms’ stakes in LNG developers can be as high as 45%, making them, except for Macquarie Group, major backers of LNG expansion in the European Union (see Table 1).<\/span>\u00a0<\/span><\/p>\n<\/div> Table 1. Private equity-backed LNG import terminals proposed or under construction in the European Union.<\/p>\n<\/div>\n