Goldman Takes Stake in Blue Source

The Goldman Sachs Group, Inc. (NYSE: GS) has purchased a minority stake in Blue Source LLC, a U.S. developer of carbon credits from greenhouse gas reduction project, according to a release issued yesterday by the two companies.

The size of the equity stake and the purchase price were not disclosed. However, Reuters reported that a source close to the deal said the stake is less than 10%

Through the collaboration, Goldman Sachs will structure and market a broad range of verified emissions reductions (VERs) resulting from greenhouse gas (GHG) reduction projects in Blue Source's portfolio, including those associated with methane management from coal mining, wastewater treatment, landfills and animal waste; energy efficiency; carbon capture and sequestration from fertilizer and natural gas production; and industrial gas destruction.

Goldman Sachs aims to bring the reductions to a market increasingly eager to engage in a low carbon economy. In addition, Goldman Sachs gains tools to help its clients manage GHG-related risks in both the voluntary and pre-compliance carbon markets.

Furthermore, the recently announced joint venture between Blue Source and certain affiliated investment funds of Och-Ziff Capital Management Group LLC (NYSE:OZM) provides a competitive source of funding to identify, develop and manage emission-related investments, thereby supporting the growth of Blue Source's offset portfolio.

"Combining the market reach and trading capabilities of Goldman Sachs with the project development skills and supply position of Blue Source is not only a winning combination, but an important step in the development of the North American carbon market," said Bill Townsend, CEO of Blue Source. "This unique agreement is the next step for Blue Source as the US carbon market evolves from voluntary to compliance. We have been able to develop a high-quality portfolio of independently verified emission reductions from projects based in North America, and this new alliance creates an exceptional opportunity to reach a broad range of offset buyers through a highly experienced and well-trusted institution."

"Goldman Sachs is committed to leveraging the first-mover position of Blue Source and its extensive experience and relationships to provide best-in-class risk management to North American voluntary and compliance buyers," said Leslie Biddle, Global Head of Commodity Sales at Goldman Sachs. "Interest in the pre-compliance carbon market in the US is growing rapidly and we are excited to be able to offer our clients immediate access to a diverse selection of emission reductions to manage their carbon risk."