Alternative investment manager Blackstone announced today a $400 million strategic investment led by its energy-focused private equity business Blackstone Energy Partners in global carbon and environmental commodities market infrastructure platform Xpansiv.

Xpansiv provides infrastructure enabling market participants to value and exchange environmental commodities such as carbon, energy and water, and provides market data for voluntary carbon offsets, renewable energy credits (RECs), and low-carbon fuels. The company’s business units include ESG commodities spot exchange CBL, Australia-based water spot exchange H2OX, market data provider XSignals, and ESG-inclusive commodities multi-registry portfolio management system EMA.

Xpansiv CEO Joe Madden said:

“Blackstone’s support of the Xpansiv vision for commodity markets that value ESG is a major milestone and the beginning of a new chapter for the company. This partnership will help us solidify our leading position in carbon and leverage our platform to scale markets and products to accelerate the energy transition across renewable energy, digital fuels, and beyond.”

Blackstone’s strategic investment comes as environmental commodity marketplaces, and particularly those for carbon markets, are anticipated to see significant expansion over the coming years, as companies and businesses increasingly launch net zero ambitions, and turn to carbon offsets and credits as a bridge to their own absolute emissions reduction efforts, or to balance difficult to avoid emissions.

Bilal Khan, Senior Managing Director at Blackstone, said:

“We believe environmental commodities are a critical new asset class that must scale exponentially to meet climate change mitigation targets pledged by governments, companies, and entire industries. Xpansiv is a leader in this space, and we are delighted to provide the capital and resources to help them further expand their offerings and accelerate their growth.”

Proceeds from the investment will be used to Xpansiv to drive growth through organic initiatives and to continue on its acquisition path.

Xpansiv Chief Strategy Officer Nathan Rockliff said:

“This partnership will support our strategic path to accelerate our growth in global commodity markets following the acquisitions of SRECTrade, HVB, and OTX in 2021, and our investment in APX, the leading provider of registry infrastructure for energy and environmental markets.”

ESG and energy transition have emerged as a key investment themes for Blackstone. Earlier this year the firm stated that it sees an opportunity to invest an estimated $100 billion in energy transition and climate change solutions projects over the next decade.

David Foley, Global Head of Blackstone Energy Partners, said:

“As a leading private equity investor in the dynamic energy transition market, we proactively seek out companies with entrepreneurial management teams that are well positioned to benefit from fundamental long-term trends. As more corporations make net-zero commitments, there is an increasing need to efficiently connect them with—and indirectly provide funding for—the most efficient, high-quality developers of CO2 reduction projects. Xpansiv has a first-mover advantage, and Blackstone’s investment will enable them to capitalize upon that lead, creating a uniquely positioned company with ownership of critical software, technology, and a scalable exchange for trading voluntary carbon offsets and related environmental products. We believe this market will experience exponential growth over the next decade.”