Sen. Sinema Saved Her Wall Street Donors Billions By Preserving A Tax Loophole

Sen. Sinema’s "carried interest" loophole is a win for private equity and dirty energy

Senators Joe Manchin and Kyrsten Sinema walking together at the US Capitol Building, flanked by aides wearing face masks.

Senators Joe Manchin and Kyrsten Sinema are the two moderate Democratic votes needed to pass meaningful climate legislation.

Senator Krysten Sinema has succeeded in protecting a tax loophole benefiting private equity and other fund managers. New analysis from Friends of the Earth and BailoutWatch highlights the danger this powerful constituency poses to the climate and the influence it wields over the Arizona senator, a major beneficiary of the industry’s donations.

“Senator Sinema has certainly delivered for the private equity industry and its reckless investments in fossil fuels,” said Lukas Ross, Program Manager at Friends of the Earth.

Executives at the three biggest private equity firms on the planet—Blackstone, KKR, and Apollo—have contributed nearly $100,000 to Sinema’s various Political Action Committees (PACs) since January 2021, FEC filings show. The industry is now flexing its political muscle to maintain a tax loophole worth $17 billion, which would have been eliminated under the proposed Inflation Reduction Act (IRA) as first proposed.

Those same three firms have been involved with 75 fossil fuel deals over the past decade in the United States alone through a variety of buyout, infrastructure, and venture funds, according to Preqin, a data provider. As of 2021, The Private Equity Stakeholder Project found that fossil investments outnumbered renewables by four-to-one at ten of the largest private equity buyout funds. 

The new analysis found:

  • Twenty executives from Blackstone, Apollo, and KKR donated $99,400 to PACs associated with Kristen Sinema since January 2021. 
  • Among the most prominent contributors: Sean Klimczack, Blackstone’s Global Head of Infrastructure, made the maximum legally allowable Primary and General Election contributions to Sinema for Arizona in March 2022. KKR co-CEO Scott Nuttall also maxed out his contribution in December 2021, as did Stuart Rothstein, the Chief Operating Officer of Apollo, in September 2021.
  • All three firms are key players in Big Oil’s effort to expand exports of US liquified natural gas (LNG) four-fold by 2030:
  • In May 2022, Blackstone purchased a 49% stake in the Elba Island LNG export facility from the fossil fuel giant Kinder Morgan
  • In June 2021, KKR paid $3.37 billion for a 20% stake in Sempra Infrastructure Partners, which in the US boasts one LNG export facility already online and another with the permits to begin construction
  • In July 2022, Apollo announced a $2 billion joint venture with LNG logistics firm New Fortress Energy for an 80% stake in 11 LNG vessels.

The carried interest loophole allows private equity funds to conduct business deals — including many in the fossil fuel sector — that may otherwise be unprofitable. Private equity firms have invested over $1 trillion in energy since 2010.

“This news shows how industries like Private Equity protect their role in driving climate chaos by funding powerful politicians,” said Chris Kuveke, data analyst for BailoutWatch. “Tax subsidies benefiting the worst polluters, and those funding them, are a huge obstacle to reducing emissions and addressing this ongoing catastrophe.”