BlackRock, the world’s largest asset manager, has made headlines with its acquisition of an eight-year-old, 160-employee renewable energy development company.
Wellesley, Massachusetts, USA.
Although it is a small town with a population of about 29,000 on the outskirts of the big city of Boston, there are many wealthy households. It is known as a prestigious women’s university that has produced a director.
However, the theme of this article is neither the historic university campus nor its alumni network.
The small town is where BlackRock, the world’s largest asset manager, has identified its latest acquisition target.
Wellesley-based energy company, 8 years old, 160 employees, July 20Vanguard Renewablessaid it had accepted a takeover offer from BlackRock.
Vanguard is an industry term for “Renewable natural gas (or biomethane)” and supplies to Dominion Energy, a large company in the public works sector involved in power generation, transmission and storage of natural gas.
Biomethane is a combustible gas produced by methane fermentation of organic waste such as garbage and livestock manure, and can be used as fuel for automobiles and power generation.
According to The Wall Street Journal (July 20), as companies across the board take a defensive stance against volatile stock markets, raging inflation, and a looming recession,BlackRock will spend $700 million to acquire Vanguard, and separately invest more than $1 billion to expand the company’s business.It says.
BlackRock believes that decarbonization will become a major long-term movement that attracts investors’ expectations and interests, and it can be said that it is a move that bets on it.
Under the leadership of Chairman and CEO Larry Fink, the company was one of the first to adopt a strategy of making sustainability an investment cornerstone.
It carries the hopes of climate activists and is under scrutiny from Republican politicians who support oil and gas companies under pressure to reduce greenhouse gas emissions.
In his 2020 open letter to investee company CEOs, Chairman Fink declared that “all governments, companies and shareholders must face up to climate change.” At the briefing, the energy shift was expressed as “not a straight road”. “Companies need to invest in both fossil fuels such as natural gas and renewable energy” he pointed out.
Doug Vaccari, director of BlackRock’s Real Assets (real estate and infrastructure investments) team, who oversaw the acquisition of Vanguard, explained to Insider:
“Our acquisition of Vanguard is still at a pioneering timing. I expect that we will be able to make full use of our position as a pioneer to create something special before the market turns into a red ocean.” ”
Vaccari says that Vanguard had no particular concerns about the acquisition during this time of economic turmoil, as it had many established companies as clients.
Going forward, BlackRock will utilize its extensive network to expand Vanguard’s service coverage to major markets across the United States.
The asset management balance of BlackRock’s real asset team (as of June) is approximately $70 billion (approximately 9.45 trillion yen), and it is an alternative investment division with a management balance of $330 billion (approximately 44.55 trillion yen). belong to.
Pros and Cons of ‘Renewable’ Natural Gas
Some analysts and environmental activists say the “renewable natural gas” production process is more damaging to the environment than its proponents claim, and the industry’s marketing practices are questionable. Blame.
Activists believe that the name “renewable natural gas” misleads consumers by cloaking greenwash, goods and services that are not environmentally friendly. has been widely debated.
Laura Feinstein, Fellow for Energy Policy at the Sightline Institute, a nonprofit sustainability think tank, told Insider:
“The gas industry has done a great job of branding natural gas and renewable natural gas. It feels like a solution.
But thoseThe name does not accurately describe the nature of the product. A more accurate name would be ‘waste gas’.”
In 1982, exactly 40 years ago, the first renewable natural gas production facility in the United States was built.
Although not very widespread at first, demand for renewable natural gas as an alternative to fossil fuels has skyrocketed as all companies are required to take steps to reduce their environmental impact. It’s getting higher.
BlackRock has noticed the change.
According to US Environmental Protection Agency data,As of 2021, there are 174 renewable natural gas production projects underway in the United States that link landfills (waste landfills) and agriculture (manure and waste), a jump of dozens of times compared to 13 in 2005. there is.
The renewable natural gas project is an effort to recover and convert methane (CH4), which has a much higher global warming potential than carbon dioxide (CO2), into energy.
According to the US Environmental Protection Agency, replacing conventional diesel fuel (diesel) with renewable natural gas can significantly reduce harmful gas emissions and improve air quality.
In January 2022, Macquarie Capital, a division in charge of capital markets and corporate advisory services of Macquarie Group, a major Australian financial services company, will establish a platform for operating and investing in renewable natural gas infrastructure projects. “Aerogy” was launched.
Sarah Song, a research analyst at British natural resources consultancy Wood Mackenzie, told Insider about the state of the industry.
“The renewable natural gas market is experiencing exponential growth as companies in the utility sector and local governments seek ways to reduce their carbon footprint in order to meet net-zero greenhouse gas emissions targets.
Therefore, the industry’s success as it expands depends on the state of California’s efforts to improve the sustainability of the mobility sector.Depends on state and federal government policies and initiatives that give renewable natural gas an edgeIt can be said that
David Cox, founder and CFO of the Coalition for Renewable Natural Gas, a non-profit industry group, said investing in renewable natural gas infrastructure for a company as big as BlackRock , says that there is an increasing possibility that the market will be encouraged to scale up, and that this is currently attracting the attention of many stakeholders.
But Cox said such a dramatic expansion raises concerns for the renewable natural gas industry, which has long been a niche market.
“The concern with growth is, in short, that like any other industry, like other commodities that are traded on a daily basis, there is a danger that it will be drowning in everything else.
It is not growth for the sake of growth, in other words, it is not enough just for the market to grow. It is our duty and responsibility.”
[Original: Why BlackRock bought a provider of renewable natural gas, a controversial energy source, for $700 million]
(Translation and editing: Chikara Kawamura)
Source: BusinessInsider
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