Investment firm Oak Hill Advisors, which has $52 billion in assets under management, is hunting for a million acres of forest land to buy and sell, as the market for carbon offsets blooms.
In a $500 million joint venture with corporate climate advisor Bluesource, Oak Hill plans to purchase woodlands in North America that would otherwise be used for timber and sell them as carbon offsets, the companies said in a press release Tuesday.
Companies are vying for ways to reduce their carbon footprint, and one way to do that is with carbon offsets, in which firms take credit for preserving trees that absorb carbon in the air, Insider reported previously.
The carbon credit market was worth $300 million in 2018, and one analyst estimated it could be worth $100 billion by the end of the decade, Bloomberg reported in June. The concept of carbon offsets is a controversial one for many reasons, one of which is that some say companies shouldn’t be able to purchase them in lieu of lowering their own emissions, the Journal reported.
In the new partnership, Bluesource and Oak Hill Advisors will select land based on the increased benefits to the climate and revenues from carbon offsets, the release said.
“This represents the beginning of an expansive opportunity to repurpose forest investments that otherwise would strictly consider revenue from timber harvests,” the companies said.
Bluesource Chairman and Chief Strategy Officer Bill Townsend said the idea behind the partnership is to put capital alongside the company’s carbon knowledge to help address “the global challenges we face.”
Adam Kertzner, portfolio manager and senior partner at Oak Hill Advisors, said he’s excited about the positive environmental impact and the “highly attractive investment attributes.”
“This joint venture is an opportunity to accelerate the evolution of sustainable forestry and the ongoing development of the carbon credit markets,” he said.