What's going on?

BP agreed to buy US renewables firm Archaea Energy for around $4 billion on Monday.

What does this mean?

BP set out an ambitious plan to become net-zero within just thirty years back in 2020. And while plenty of firms have made similar promises in the past, BP seems to really be putting plans into motion: the British energy giant has been using its windfall profit to fund its green initiatives, and it just snapped up leading renewable natural gas firm Archaea. And get this: the $4-billion deal is an eye-watering 52 times the value of Archaea�s 2021 sales � and the firm�s yet to turn a single dollar of profit. Nothing says commitment to the cause like putting your money where your mouth is.

Why should I care?

For markets: Two roads diverged.
Big energy firms have reached a crossroads. In one direction stretches a road toward a green renewable utopia, where oil and gas have bitten the dust and sustainable energy reigns. But a quick glance down the other road shows a world with lower oil and gas supply, resulting bumper prices, and reservoirs of cash for the producers that stick around. BP seems to be heading for the greener pastures, but time will tell whether it�s just a money-wasting mid-life crisis.

The bigger picture: Playing the long game.
It�s a rare approach BP�s taking here: after all, the oil giant�s paying over the odds and since this acquisition is a bet likely to only pay off in the longer term (if at all), it�ll have to sit tight before it comes good. That kind of move doesn�t typically come across as good news for impatient shareholders, mind you. A big dollop of skepticism about the firm�s push into the renewables space might be one of the reasons why BP�s share price is still way down on its all-time highs back in 2006.