BP Boosts Its Bet on Trees

HP PLC

BLOOD PRESSURE 2.72%.

has bought a majority stake in the largest US carbon producer, doubling the belief that protecting forests is crucial to achieving industry’s carbon reduction targets.

At the end of 2019, the oil giant invested $5 million in the Pennsylvania Finite Carbon Project, which helps landowners sell their forests as carbon sinks. BP, which holds a majority stake in Finite, plans to take over the global business of paying landowners not to cut trees.

BP and Finite did not disclose the financial terms of the last agreement, but stated that the timber company is now part of the Launchpad Energy Company. The entity operates like a private equity firm and makes substantial economic bets in the company to accompany its expansion.

Finite Carbon has the potential to create a global platform for the management and financing of natural solutions to the climate problem, he said.

David Ayton,

Executive Vice President for Innovation and Engineering at BP.

BP itself is one of the world’s largest buyers of forest carbon credits, a kind of climate currency. The company has invested hundreds of millions of dollars in compensatory measures to comply with California regulations. They have what is called a cap and trade system designed to reduce greenhouse gas emissions by making pollution more expensive over time for companies operating in the state.

In the Californian system, centuries-old conservation contracts reward the conservation of forests with credits, each representing one tonne of carbon stored in trees for which landowners have been paid for felling without compensation.

BP bets that capping and trading will expand. At the same time, there is a growing speculative market for so-called voluntary compensation. These credits are created according to California’s strict rules, but are not used for compliance purposes – at least not yet.

Currently, voluntary offsets are mainly used by companies that want to remove emissions from their own carbon registry. Billions of dollars have been accumulated in ESG funds that promise to invest for environmental and social responsibility, encouraging companies to start a race to reduce emissions and offset those they cannot avoid. companies including

Amazon.com Inc,

Apple Inc.

и

Royal Dutch Corps

PLC. has promised carbon neutrality for decades to come.

BP, which has set itself the target of achieving carbon neutrality by 2050, claims to be responsible for 415 million tonnes of carbon emissions per year from its operations and from the burning of oil and gas produced by drivers and power plants. In addition to ensuring an adequate supply of offsets, energy companies such as BP have business units that can benefit from the wider demand for carbon offsets.

Energy companies and others are developing carbon dioxide capture technologies that remove carbon dioxide from the atmosphere and store it underground. So far, however, this solution has not been cost-effective and has not been tested on a large scale. In terms of carbon sequestration, trees are a known quantity in nature.

http://server.digimetriq.com/wp-content/uploads/2020/12/BP-Boosts-Its-Bet-on-Trees.5.jpeg

Tree height is measured in Tennessee forest used for carbon offsetting credits.

Photo:

Brett Carlsen of the Wall Street Journal.

Like other forestry consultants, the definitive pruning of trees on behalf of landowners. But instead of estimating what the sawmills will pay for the wood, the finite tree growers measure the trees to estimate the biomass, and thus the amount of carbon stored on the site.

Finite created and sold compensation for the landowners. These include the railways, the Passamaquoddy tribe of Maine, the Appalachian Coal Concerns, land trusts and forestry organizations that pool money from investors to buy forests.

Finite says its customers have paid more than $500 million to not cut trees, mostly customers who use compensation to work in California. According to the California Air Resources Board, Finite is responsible for more than 45% of all forestry loans issued by the state since the company started selling in 2013.

The company used BP’s previous investment to hire foresters and set up an online platform to help small landowners sell voluntary credits, eliminating much of the labor and expense associated with registering large tracts of land in the California program.

Demand for voluntary credits from carbon reduction companies has recently weighed on this 20-strong company, according to

Sean Carney,

which Finite founded in 2009 together with donors and will remain CEO. BP’s larger investment will enable Finite to expand its logging activities to forests around the world.

They’re doubling their staff and we’re increasing it, Carney said. BP operates in 70 countries; we don’t intend to be in every country overnight, but it’s a start.

Investors have taken ESG funds to new heights by 2020 and the feds are monitoring the situation. The BBC explains why the regulators are considering ethical and sustainable investment funds. Photographic illustration: Alex Kusoyan

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Email Ryan December at ryan.dezember@wsj.com.

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