BP has set up a subsidiary over the past year to create five $1bn businesses by 2025 in an attempt to tackle what the UK oil and gas major calls the “dual challenge” of providing more energy with fewer carbon dioxide emissions.

Launchpad, an entity that sits alongside BP’s venture capital unit, is focusing on building large-scale businesses that can run parallel to existing hydrocarbon divisions and specialise in digital and low-carbon technologies and the circular economy.

BP Ventures invests small sums and takes minority stakes in new energy businesses, for preferential access to disruptive technologies, maintaining an arm’s length relationship with these companies.

But Launchpad will be a majority owner of businesses its management believes it can transform into large global companies, which can sit within BP’s asset portfolio. Some will be spun out of the company’s own research and development division.

“We are trying to build unicorns in the energy business,” said Stephen Cook, managing partner of Launchpad and chief commercial officer in BP’s technology division.

“It’s a bit of a cliché, but the term is a proxy for scale,” Mr Cook said. “Without this, you are not able to maximise impact [and accelerate the energy transition],” he said. “We needed to augment the capability we already have . . . to build our own new businesses.”

Potential $1bn companies include Lytt, a subsurface analytics company, and Stryde, a seismic technology business, both of which were developed to boost the productivity of oil wells. Launchpad is now looking at wider applications for these technologies across lower-carbon energies and the potential to sell its services to other groups.

Other companies in development include a predictive wind energy infrastructure maintenance platform and a carbon management and offsetting app, both of which BP plans to launch in the first three months of this year.

Oil and gas companies are under growing pressure from climate activists and investors to pivot towards new, cleaner businesses and propel the world’s shift away from fossil fuels. Carbon emissions, mostly caused by the burning of hydrocarbons such as oil and coal, trap heat in the atmosphere, which leads to climate change.

Rob West, founder of consultancy Thunder Said Energy, said rather than building wind or solar projects, incubating and scaling new businesses that draw on and expand on their existing technologies would give them a better advantage.

“These are more proprietary, the returns are higher, and they actually accelerate the pace of energy transition. We’ve screened 65 of these technologies . . . and the leading examples are extremely exciting,” Mr West added.

Yet the $100m BP has invested already in Launchpad companies is still a fraction of the $15bn-$17bn it spends annually, primarily on its core oil and gas.

Still, CB Insights’ data show the venture units of BP, Royal Dutch Shell, Total, Chevron and Saudi Aramco are the most active among energy groups. Spending has risen eight-fold between 2015 and 2018 with these companies set to participate in deals worth more than $1bn in 2019.

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