Corteva and bp plan joint biofuel feedstock venture

INDIANAPOLIS - Corteva Inc. (NYSE: NYSE:CTVA) and energy giant bp (NYSE: BP (NYSE:BP), LSE: BP.L) announced Monday their intention to establish a joint venture aimed at producing biofuel feedstocks. This move comes as part of a broader push to supply the growing demand for sustainable aviation fuel (SAF), in line with increasing global mandates for the decarbonization of the aviation sector.

The proposed collaboration is set to focus on the production and delivery of crop-based biofuel feedstocks. Corteva and bp have signed a non-binding memorandum of understanding with the objective of forming a joint venture that aspires to scale up its operations to deliver one million metric tons of biofuel feedstocks annually for SAF production by the mid-2030s.

Corteva's strategy involves contracting with farmers across North and South America, as well as Europe, to cultivate specific crops like proprietary mustard seed, sunflower, and canola, which are considered suitable for SAF production. The initiative aims to integrate new cropping systems that align with EU RED III criteria and qualify for US Low Carbon Intensity policy incentives, potentially creating a new revenue stream for farmers.

Brook Cunningham, Chief Strategy Officer at Corteva, highlighted the partnership's potential to leverage agricultural technology and relationships with growers to contribute to decarbonization efforts, particularly in the European airline industry. Emma Delaney, executive vice president of customers & products at bp, also recognized the value of combining Corteva's agricultural technology and grower relationships with bp's expertise in refining and trading.

The companies anticipate that definitive agreements will be finalized in 2025, with the operational launch of the joint venture expected later that year.

Corteva Agriscience is known for its focus on innovation and customer engagement in the agriculture sector, delivering solutions to meet the challenges of food production and sustainability. The company's portfolio includes a mix of seed, crop protection, and digital services and has a presence in global markets.

This collaboration is part of the ongoing efforts by companies to address climate change and meet regulatory requirements for cleaner energy sources. It is based on a press release statement issued by Corteva Inc.

In other recent news, BP reported a successful third quarter for 2024, with an underlying profit of $2.3 billion and an increase in upstream production by approximately 3% year-to-date. The company also experienced significant growth in its electric vehicle charging business, with sales reaching 1 terawatt hour, marking an 80% year-on-year growth. Furthermore, BP announced a share buyback of $1.75 billion and a dividend of $0.08 per share.

In response to tropical storm Rafael, BP and other energy companies operating in the Gulf of Mexico have taken measures to secure their offshore platforms and evacuate non-essential personnel. Equinor has gone a step further by shutting down production and planning to complete the evacuation of its facilities.

European companies, including BP, have exceeded earnings expectations for the third quarter, despite ongoing concerns about weak demand from China. Approximately 56% of the STOXX 600 companies have surpassed expectations, a performance broadly consistent with the average quarter.

Washington state's carbon market, a key element of the Climate Commitment Act, faces potential repeal in the upcoming elections. BP, which operates the largest oil refinery in the Pacific Northwest, supports the carbon market and is actively working against the initiative.

These recent developments indicate a robust financial performance for BP, despite the challenges posed by natural events and potential policy changes. The company continues to focus on operational efficiency and strategic financial management to ensure sustained growth.

InvestingPro Insights

BP's strategic move into biofuel feedstocks with Corteva aligns well with its broader diversification efforts in the energy sector. According to InvestingPro data, BP's revenue for the last twelve months as of Q3 2024 stood at $193.93 billion, reflecting its significant market presence. Despite a 14.34% revenue decline over this period, BP's pivot towards sustainable aviation fuel (SAF) production could open new revenue streams in the long term.

An InvestingPro Tip highlights that BP has maintained dividend payments for 33 consecutive years, showcasing its financial stability even as it invests in new ventures like the proposed joint venture with Corteva. This consistency is particularly noteworthy given the company's current dividend yield of 6.56%, which may attract investors looking for steady income while the company explores growth in the biofuel sector.

Another relevant InvestingPro Tip indicates that BP's management has been aggressively buying back shares. This could signal confidence in the company's future prospects, including initiatives like the SAF feedstock production partnership.

For investors interested in BP's evolving strategy and financial health, InvestingPro offers 9 additional tips that provide further insights into the company's performance and outlook. These tips can help investors make more informed decisions as BP navigates the transition to cleaner energy solutions.

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