4 months ago • 2 mins
What’s going on here?
BlackRock announced plans to invest $550 million in Occidental Petroleum's controversial carbon-capture project.
What does this mean?
Occidental’s ambitious Stratos project is one for the science buffs, aiming to become the world’s go-to facility for “direct air capture” (DAC). That’s a revolutionary technology that extracts carbon dioxide from the atmosphere, before using it to make building materials, agricultural products, and fuel. Stratos should start operating commercially in 2025, and has already attracted buy-ins from heavyweights Amazon and Airbus. And with goals to neutralize the carbon equivalent of one million barrels of oil a year, the project could play a part in the International Energy Agency’s net-zero plans. But here’s the catch: environmentalists have criticized the project’s plans to pump captured carbon dioxide into old oil reservoirs to make more dirty crude oil. BlackRock’s already sold, though, because the firm’s $550 million investment makes up 40% of the project’s total cost, and is one of the biggest financial commitments to DAC technology so far.
Why should I care?
For markets: Mining for silver linings.
There’s turning lemons into lemonade, and then there’s turning climate threats into money-making opportunities. BlackRock’s clearly out to squeeze some lemons, with the firm’s CEO saying the future’s “multibillion-dollar success stories” will be energy companies that invest in tech like DAC. And it’s not the only believer: Occidental was the S&P 500’s top performer last year, and counts Warren Buffett as its biggest shareholder.
The bigger picture: The gang’s all here.
Carbon capture technology is still in its infancy, with few major success stories and plenty of project failures in its history. But BlackRock’s support is a nod to the tech’s mounting credibility. The US government’s on board too, granting carbon capture companies major tax breaks and over $1 billion in investments. No wonder fashion retailer H&M, JPMorgan Chase, UBS, and SwissRe have started spending in the space as well.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.