BP is already a major trader on carbon credit markets.
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BP has taken a controlling stake in Finite Carbon, the largest carbon offset developer in North America, as the British oil supermajor continues to diversify its energy investments to meet climate goals.
Shares in BP rose 1% in London trading on Wednesday.
The back story. In the midst of an unprecedented year that has seen the Covid-19 pandemic bring about a rapid and sustained collapse in oil demand, BP stuck to ambitious climate plans. After taking over as chief executive in February, Bernard Looney set a goal for the energy giant: become carbon neutral by 2050, including fuel burned by customers.
The company has since put its money where its mouth is. In August it pledged to increase low-carbon investment tenfold, to $5 billion a year, by 2030. Since September, it has taken a 50% stake worth $1.1 billion in Equinor’s wind farm developments in the U.S., and announced a green hydrogen project with Denmark’s Ørsted.
Plus:The UK’s Ambitious Climate Goals Could Lift Old and New Energy Companies
What’s new. BP said on Wednesday that it took a majority stake in Finite Carbon, the largest developer of carbon offsets in North America. The acquisition, which BP didn’t value, builds on an existing $5 million investment the company made in Finite in October 2019.
With 50 projects on 3 million acres in the U.S., Finite connects landowners who manage forests, which are large stores of carbon dioxide, to companies looking to cancel out their own emissions. Companies can purchase carbon offsets—a fee per ton of carbon stored in the forest—privately or through carbon credit markets.
“Finite Carbon has the potential to build a global platform for managing and financing natural climate solutions,” said David Eyton, BP’s executive vice president of innovation and engineering. “Deepening our partnership will allow them to accelerate their development and expansion.”
Also read:How Renewable Energy Can Pay Off for Big Oil
Looking ahead. We already know BP seems serious about the energy transition. The new controlling stake in Finite confirms its ambition for dominance in carbon credit markets—where it’s already a major trader.
Finite has a lot of potential: it expects to deliver $1 billion to landowners by 2030, after taking what could be a third of the profits. BP’s investment includes bringing the company into its in-house business accelerator, which should see Finite expand digital operations and into new geographical markets.
