BP plc acquired a majority stake in forest carbon-management company Finite Carbon, expanding on an initial investment made last year.
The transaction gives BP – one of the world’s biggest carbon-credit traders – control of the largest developer of forest carbon-offset credits in the U.S. It comes at the end of a year that’s seen the oil major step up its commitment to reduce emissions and increase investments in cleaner energy.
Finite Carbon, with 50 carbon projects over 3 million acres of land, connects landowners to businesses that pay a fee per ton of carbon dioxide permanently stored in the forest. Companies can purchase offsets on the market or privately to cancel out their emissions.
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 specialize in digital and low-carbon technologies, BP said in a statement, without valuing the deal.
“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.”
The BP acquisition may help Finite Carbon to digitize the process of carbon reporting. Currently, employees from the Wayne, Pennsylvania-based company measure trees with tape measures, a laborious undertaking. Digitization will replace that with satellite surveillance to quantify how much carbon is there.
Finite Carbon says it has generated more than $500 million in revenue so far for landowners. It expects BP’s increased investment to deliver a further $1 billion by 2030 amid growing interest in carbon pricing and offsets. In California, where the company currently does most of its work, the oil majors and transportation sector are the biggest emitters, according to 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.”
© 2020 Bloomberg L.P.