Article by Josephine Moulds and Simon Lock republished from The Bureau of Investigative Journalism under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Public sector pensions have ploughed billions into opaque investment funds which are financing ruinous gas projects on the US Gulf Coast

In brief

• UK public sector pension schemes are bankrolling rapid expansion of liquefied natural gas production in the US South, posing a major climate threat
• US gas projects are reaping rewards from price shocks caused by Trump’s war in Iran
• Gas terminals are frequently built in poor neighbourhoods, causing health problems in nearby communities

Trump’s war in Iran has boosted the fortunes of US gas companies – and UK savers are unwittingly bankrolling their expansion.

Sixty local government pension funds have invested a total of £8bn into funds paying for the rapid construction of gas infrastructure on the Gulf Coast of the US. Residents say these terminals are already causing health problems in their communities. Experts say they represent one of the biggest threats to the future of the planet.

Over 7 million school staff, civil servants and other public sector workers either save with, or receive their pension from, local government pension schemes. Our revelations have sparked concerns among local councillors, who have urged fund managers to divest from fossil fuels.

While the companies behind these projects are enjoying a boost from the war in Iran, they could tumble in value as the world switches to renewable forms of energy. Councillor Andrew Scopes, who sits on an advisory panel for West Yorkshire Pension Fund, said: “We will still be paying benefits out in 60 years’ time. We need to be looking beyond the possible short-term gains, at the long-term risk.”

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Members of the scheme were dismayed to find what they were bankrolling. “The UK could be funding a safer, healthier future for all via renewable energy generated in the UK that is cheap, safe, clean and owned by us,” said Jane Thewlis, a retired social worker.

The news comes as the government is making changes to the law governing pension schemes. During a debate in the House of Lords, peers from several parties raised the issue of pension fund investments in climate-wrecking companies.

Baroness Hayman, a crossbench peer, told us: “Many UK pension funds are already reducing their exposure to fossil fuels, recognising the risks these investments pose. But with £3 trillion held in UK pensions, and the climate and nature challenge growing, there is a clear opportunity to better protect savers from rising financial and environmental risks.”

A gas explosion

The giant white orbs containing liquefied natural gas (LNG) look almost alien. Scores of these terminals are popping up along the 1,200km Louisiana and Texas coastline, a building frenzy turbo-charged by Trump’s second term. If all the planned terminals are built, the LNG produced in the US would generate the same amount of greenhouse gases each year as every EU country combined, says Jeremy Symons, a former official at the US environmental regulator.

UK pension funds have supported this expansion for years. In 2019, a little-known infrastructure fund called Stonepeak put up $1.3bn to complete the construction of the Calcasieu Pass gas terminal in the south-west corner of Louisiana. Twenty miles inland, building has started on another terminal also funded by Stonepeak.

Calcasieu Pass LNG terminalVenture Global

UK savers in 12 local government pension schemes, including West Yorkshire, South Yorkshire and Worcestershire, have invested over £360m in Stonepeak funds that financed these plants, according to figures from council records and data provider Pitchbook.

Since starting operations, Calcasieu Pass has reported hundreds of emissions violations and paid authorities a $245,000 settlement. That’s unlikely to make much difference to its owner, Venture Global, a major Trump donor. Its shares rocketed by more than 80% after the US and Israel started bombing targets in Iran.

Roishetta Ozane, a resident turned activist, lives near both terminals. She told us that pollution from the nearby gas, petrochemicals and oil infrastructure has caused asthma and an increase of cancer in the area – an account borne out by academic research.

“We’re seeing more women develop health issues that are living near these facilities, having pre-term babies or having miscarriages,” she said. “We’re seeing our air quality deteriorate. We have a drinking water crisis.” She said residents had to deal with noise pollution from construction and the flaring of excess gas from the terminals.

Roishetta Ozane (second left)

Two of her children have asthma. She told us the doctor said pollution may have exacerbated the seizures suffered by her son, who died last year. “When my son passed away, I was like, what are we doing this for?” she said. “We’re fighting for our children, for our future, for our community, but yet they’re dying.”

Further down the coast, a huge fireball at Freeport LNG in June 2022 made the risks of these installations vividly clear. IFM Global Infrastructure Fund – which counts among its investors more than 20 UK pension funds, including Avon, East Sussex and Aberdeen – paid $1.3bn to help build Freeport LNG in 2013. It continues to hold a stake in the project.

Travelling south, the construction boom continues. Right next to the Mexican border, Rio Grande LNG is building a sprawling complex that the NGO Sierra Club estimates will match the emissions of 50 coal-fired power plants every year. Campaigners say the project is already contributing to habitat loss in an area critical for endangered animals such as ocelots, falcons and sea turtles.

French bank Société Générale backed out of funding the controversial project. But it was able to proceed thanks to a $5bn commitment from BlackRock’s Global Infrastructure Partners Fund V – which is supported by nearly £200m of UK savers’ pensions, from Waltham Forest to Greater Manchester.

In total, we found eight US-based LNG terminals backed by UK pension money. Taken together, those terminals would give rise to more CO₂ every year than the entire UK several times over, according to Sierra Club data.

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A spokesperson for IFM Investors told us that the fund publicly discloses its infrastructure equity assets. They added: “Natural gas is increasingly utilised as a transition fuel for decarbonisation globally … These assets benefit from investment from long-term, trusted capital partners like pension funds, who can reinvest in them and pave the way for carbon emissions reduction.”

LNG is often promoted as a cleaner alternative to traditional fossil fuels. However, a peer-reviewed study found it is 33% worse in terms of planet-heating emissions over a 20-year period compared with coal.

Worcestershire Pension Fund said it invests through structures that mean “exposure to any single asset is indirect, limited, and a very small component of a broader portfolio.” It said the Stonepeak fund in question “publishes detailed annual reports and complies fully with statutory disclosure requirements”.

A greener pension

When it comes to curbing carbon emissions, council pension funds and campaigners have tended to focus on selling their shares in companies like BP and Shell. But a growing portion of pension funds are invested in so-called “private markets”. Typically this involves putting money into a number of big funds, which in turn invest in everything from private equity to property to company loans.

Private markets can offer healthy returns. They’re also something of a black hole for information, which makes following the money much more difficult. And they’re often excluded from the scope of council climate commitments.

The upshot is that even pension schemes that have promised not to invest in fossil fuels have ploughed money into funds that are paying for major gas projects.

Take Waltham Forest Pension Fund, which in 2016 became the first local authority to make such a commitment. Simon Miller, a former councillor who chaired the pension fund committee, said the council already had a number of green goals to improve the lives of residents. “[But] we had a pension fund that was merrily invested in fossil fuels that was absolutely out of lockstep with the political direction and philosophy of the borough.”

The council’s pension fund proceeded to sell its investments in fossil fuel companies over the following five years.

According to its latest report, however, Waltham Forest is still invested in funds managed by Global Infrastructure Partners that have financed Rio Grande LNG and Allete, which owns an 18,000-acre coal mine in North Dakota.

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Lewisham Pension Fund has also brought down the emissions associated with its investments after committing to sell its holdings in fossil fuel companies. But it remains invested in a huge infrastructure fund operated by JP Morgan Asset Management. While this fund has substantial investments in renewable energy, it continues to hold a 50% stake in Third Coast, which spilled over 1 million gallons of oil into the Gulf of Mexico in 2023.

In February 2024, West Yorkshire Pension Fund said it would no longer lend to the oil, gas and coal sector. According to the new standards set by the authority, councillor Andrew Scopes said, the decision to invest in a Stonepeak fund that bankrolled an LNG plant on Ozane’s doorstep would be “very difficult to justify”.

Jane Thewlis, a campaigner and member of the scheme, said: “We are particularly concerned if [West Yorkshire Pension Fund] is funding LNG infrastructure in the US, which is not compatible with a livable climate. We expect our elected representatives to use our money to fund a safe future – not to hasten the end of humanity.”

West Yorkshire Pension Fund said its environmental, social and governance policy “takes account of the current status and role of gas and oil within the energy transition, particularly with regard to reliability, affordability and coal displacement”. It said LNG is seen as “a bridge between today’s fossil‑fuel‑dominated energy system and a future low or zero‑carbon one”.

JP Morgan, Stonepeak and Waltham Forest council declined to comment on the record. Lewisham council said it cannot comment in a pre-election period. Third Coast, the LNG port operators, Global Infrastructure Partners and other local councils did not respond to requests for comment.

What next?

• We are providing our research to campaigners and pension fund advisory panels so they can challenge decision makers on investments in infrastructure funds
• New rules mean that council pension funds will be combined into pension fund pools, limiting councillors’ power over investment decisions. We will investigate what that means for funds that have committed to invest responsibly
• Parliament is discussing the first of a number of pension reforms, where campaigners are pushing for greater recognition of climate risk

Article by Josephine Moulds and Simon Lock republished from The Bureau of Investigative Journalism under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.