BP acquires majority stake in largest US carbon offset developer

London

BP PLC has acquired a majority stake in the largest US carbon offset developer, Finite Carbon, the oil major said on Wednesday, as part of its climate goals and to develop a new revenue stream.

BP and other European-listed oil and gas peers such as Royal Dutch Shell are betting on an expected rise in carbon credit prices to counter falling fossil fuel profits as the energy transition accelerates.

California-based Finite pays landowners to manage forests, generating carbon offset credits which can be sold to polluters.

The firm expects to generate US$1 billion for landowners over the next 10 years, after a 20-40 per cent cut of the proceeds, its chief executive Sean Carney told Reuters earlier this month.

Finite currently has 50 carbon projects on three million acres in the United States and generated more than US$500 million in revenue for landowners.

BP invested $5 million in Finite Resources - the parent of Finite Carbon - in 2019. The latest acquisition brings Finite Carbon into the oil company's Launchpad division, which builds up businesses that specialise in digital and low-carbon technologies, BP said in a statement, without valuing the deal.

It added that it would help expand Finite's reach into other countries.

"The value of BP is that they have a geospatial team of 30 people... and satellite coverage of the entire world," Finite Carbon president Sean Carney said in an interview.

While more than half of his staff are foresters, "the technology part is something that's kind of new to us".

In California, where the company currently does most of its work, the oil majors and transportation sector are the biggest emitters, according to Mr Carney.

While carbon offsets are largely voluntary, Finite Carbon has become "overwhelmed by all the interest and demand" this year, he said, highlighting the "inevitable" trend toward a price on carbon.

"Forestry and all kinds of land use are inevitably going to be a part of this for a long time."

The BP acquisition may help Finite Carbon to digitise the process of carbon reporting.

Currently, employees from the Wayne, Pennsylvania-based company measure trees with tape measures, a laborious undertaking. Digitisation will replace that with satellite surveillance to quantify how much carbon is there.

BP announced earlier this year that it aims to become one of the world's largest renewable power generators, part of a high-profile campaign to steer the company away from its reliance on fossil fuels that emit gases that heat the planet.

The firm plans to increase its renewable power capacity 20-fold by 2030 to 50 gigawatts while reducing its oil output by 40 per cent and diverting more funds to low-carbon investments. REUTERS, BLOOMBERG