Big Oil's climate fund raises $450m for second vehicle

March 27, 10:21 CET: This article was updated with comments from CI's CIO Joshua Haacker.

Oil and gas giants Saudi Aramco, Occidental, and Baker Hughes have backed Climate Investment (CI) second $450m fund, alongside the Development Bank of Japan, French shipping conglomerate CMA CGM and Thailand's state-owned oil and gas major PTT Group.

It’s not your typical LP line up for a ‘climate fund’ but then CI isn’t your typical climate fund. The Oil and Gas Climate Initiative (OGCI), a consortium of 12 oil and gas majors, founded the investment firm in 2016 to reduce the greenhouse gas footprint of its core oil and gas business.

The original $1bn fund was explicitly designed to invest in reducing "methane emissions from gas production" and "technologies to capture and either use or store carbon emissions,” the Telegraph wrote at the time, adding that the fund would not invest in renewable energy companies.

CI has since invested in 44 companies including green steel maker Boston Metal and 44.01, a British startup that turns captured CO2 into rock, according to data from Dealroom.

New fund, new focus

Now CI has launched the Decarbonisation Acceleration Fund (DAF). The growth vehicle targets the "missing middle" – companies too mature for venture but too early for private equity – across energy, industry, transport, and buildings.

"Many solutions already exist that can reduce emissions in heavy industry while improving operational performance and profitability," said CIO Joshua Haacker in a press statement. "What's often missing is the capital beyond venture and the commercial pathways."

DAF’s first four investments demonstrate an apparent shift in focus from the previous fund toward AI, infrastructure, and efficiency solutions, one of which, US startup JessCo Solutions, appears to fall slightly outside the typical scope of climate investing.

JessCo provides vapour recovery units, combustors, and flares to the oil and gas industry. The equipment captures methane that would otherwise escape from upstream facilities, however it also has infrastructure that makes oil and gas production cleaner, cheaper, and more compliant with regulations.

Another investment from DAF is XOCEAN, an Ireland-based startup that makes autonomous electric vessels for seabed mapping and subsea surveys, largely serving energy customers in offshore renewable energy and oil and gas. XNRGY, which makes high-efficiency cooling systems for data centres, is a direct play on the AI infrastructure boom.

Haacker says he believes that both XOCEAN and XNRGY can "directly support decarbonisation solutions."

"The energy transition does not exist in a vacuum - it is driven by, and integrated with, the global economy and industrial base," Haacker told Impact Loop via email.