CDPQ grabbing a 30% share in AES Ohio's energy operations

In a significant move towards a greener future, Canadian pension fund CDPQ has acquired a 30% indirect equity interest in US energy company AES Ohio. The deal, expected to close in the first half of 2025, will enable AES Ohio to invest US $1.5bn from 2024 to 2027 in energy infrastructure and grid improvements.

However, the investment does not automatically ensure that AES Ohio is aligned with the objectives of the Paris Agreement. The utility company's current electricity sourcing relies heavily on fossil fuels, with nearly 60% of its power coming from these resources. AES Ohio's carbon intensity from energy generation stands at 0.394 tons of CO2 equivalent per megawatt hour (tCO2/MWh).

To align with a warming trajectory compatible with the goals of the Paris Agreement by 2030, the Transition Pathways Initiative's methodology suggests that a carbon intensity of less than 0.138 tCO2/MWh is needed. This means that AES Ohio will have to work twice as hard to meet this target.

Climate organisations have urged CDPQ to use its investment to help accelerate the decarbonisation of AES Ohio. The International Energy Agency states that electricity production must be carbon neutral by 2035 in developed countries such as the United States and Canada. Improvements to grid infrastructure are crucial for achieving net zero.

In an interview with our website, Marc André Blanchard, executive vice-president and head of CDPQ Global and global head of sustainability, emphasized that the fund is committed not to contribute to new oil and gas exploration. CDPQ has not been reported to contribute to new oil and gas production.

AES Ohio's investments are aimed at meeting the growing energy demand from AI data centres, which could increase peak load on the system by more than 50% by the end of 2030. This underscores the need for investments in clean energy technologies and grid improvements.

Despite the criticism from climate organisations, the investment by CDPQ in AES Ohio marks a step forward in the transition towards a cleaner energy future. However, it is crucial for AES Ohio to take decisive actions to reduce its carbon footprint and meet the targets set by the Paris Agreement.