Key Carbon Offset Technology Enabler Expands
Exhibit: Capturing Environmental Attributes for Traded Commodities
Source: Xpansiv
Key Points: Xpansiv appears poised to dominate the IT for tracking and trading environmental commodities. Thus it looks to be a key enabler for corporates’ decarbonization through supply chain management/procurement. In part with a $400 Million investment from Blackstone in July, Xpansiv closed two acquisitions in August and likely continues to grow aggressively.
An ecosystem to enable companies to put money to work in environmental commodities. Xpansiv appears poised to be the leader in enabling companies to buy low-carbon fuels and carbon offsets as well as to track and report emissions. The company is honing its “Digital Commodity Ecosystem™” — a suite of IT services that tracks the environmental attributes of commodities (see Exhibit for an illustration), supports their trading and underpins the carbon registries. Further, the company has a dominant share of exchange traded voluntary carbon transactions (its CBL Exchange claims 90% in 2021). And its war chest suggests the ability to continue to acquire customers and capabilities.
New product development this year illustrates these capabilities:
- Digital Crude Oil™. Added to Xpansiv’s Digital Fuels™ program, DCO has certified Greenhouse Gas (GHG) and Environmental, Social and Governance (ESG) characteristics for crude and is designed to foster the ability to buy a lower carbon fuel. Its natural gas counterpart has gained traction quickly, as discussed in a previous Payne Financial Flow.
- Just last week, the company announced that it is introducing ESGclear, a tool designed to help companies’ GHG emissions reporting specifically for scope 3 emissions. This product supplements a company’s tracking abilities enabled through other Xpansiv products such as the Environmental Management Account (EMA) portfolio management system.
- CBL Core Global Emissions Offset Futures. The company launched a futures market for voluntary carbon offsets earlier this year, in partnership with the CME Group.
Blackstone’s $400 Million infusion in July… In July, Blackstone Energy Partners invested $400 Million in Xpansiv. A significant fundraise by the company had been telegraphed for much of 2022, including consideration of an IPO. Blackstone indicated support for organic and inorganic (i.e. acquisitions) with the capital.
…funded August’s acquisitions of Evolution Markets and APX. At least some of Blackstone’s investment went to two acquisitions that closed in August. Evolution Markets is a brokerage firm in carbon, renewable and energy markets. The acquisition brings customer breadth, with 2,000 customers spanning energy firms, utilities, corporations and financial institutions.
Xpansiv also bought the 80% of APX Group that it did not own (it took the 20% stake earlier this year). APX, established in 1999, develops “registry infrastructure”, i.e. the systems that form the IT architecture for carbon offset and other registries. The acquisition is intended to support integration of Xpansiv’s suite of environmental management services with its customers’ interaction with product registries.
Xpansiv’s exchange businesses. The company’s CBL Exchange, which was formed in 2009 and which Xpansiv acquired in 2019 (Xpansiv was founded in 2016), claims to have facilitated 90% of exchange-traded spot voluntary carbon transactions in 2021 and to have roughly 25% total VCM market share (i.e. the majority of voluntary offsets trade privately). Xpansiv launched the first standardized global carbon offset benchmark in 2020, the Global Emissions Offset (GEO), which trades on the CBL.
Xpansiv’s other exchanges are H2OX (water entitlements), Aviation Carbon Exchange (trades CORSIA units) and OTX (compulsory stockholding obligations of oil products).
9/9/2022