Department of Finance of Canada

06/11/2024 | Press release | Distributed by Public on 06/11/2024 06:41

Deputy Prime Minister welcomes the Canada Growth Fund’s fourth investment

Deputy Prime Minister welcomes the Canada Growth Fund's fourth investment

From: Department of Finance Canada

News release

Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, welcomed the announcement of the Canada Growth Fund's fourth investment.

Second carbon contract for difference invests in Canada's first abated waste-to-energy project

June 11, 2024 - Ottawa, Ontario - Department of Finance Canada

Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, welcomed the announcement of the Canada Growth Fund's fourth investment.

Through its second carbon contract for difference, the Canada Growth Fund is supporting Varme Energy Inc.-an Edmonton-based developer of waste-to-energy facilities with integrated carbon capture and storage. In partnership with Gibson Energy Inc., Varme is seeking to develop Canada's first waste-to-energy project with carbon capture and storage in the Heartland-area.

As part of this innovative transaction structure, the Canada Growth Fund would purchase up to 200,000 tonnes per year of carbon credits for 15 years at an attractive initial price of $85 per tonne plus escalation. A form of carbon contracts for difference, carbon credit offtake agreements de-risk emissions-reducing investments by guaranteeing the purchase of carbon credits for abated emissions at a fixed price.

In January, the City of Edmonton awarded Varme a 15-year contract to collect and process 200,000 tonnes per year of municipal solid waste beginning in 2027. The new, sustainable project will integrate carbon capture technology to safely and cleanly incinerate waste and produce affordable clean electricity, all while creating well-paying jobs for Albertans, lowering home energy costs, diverting waste from landfills, and reducing emissions.

Waste-to-energy with carbon capture has significant potential to be scaled-up for use in cities across Canada, and secures Canada's position as a global carbon capture leader.

Beyond Varme's inaugural Edmonton project, the Canada Growth Fund will also have the opportunity to participate in future Canadian projects using Varme's integrated carbon capture technology and waste-to-energy approach. This will de-risk and accelerate private carbon capture investment across Canada by establishing carbon price certainty for carbon capture projects.

In Budget 2024, the government announced further action to grow the economy and create good-paying jobs today and for the next generation, including by expanding the Canada Growth Fund's carbon contract for difference offerings to new markets. Through initiatives like Canada Growth Fund, the government is empowering entrepreneurs and innovators to turn their ideas into success stories, helping to unlock a brighter, more prosperous future.

Quotes

"Our government's economic plan is focused on building an economy that works for every generation-especially Millennials and Gen Z. Today's Canada Growth Fund investment in Varme's innovative carbon capture technology will produce new clean electricity to lower home energy costs, and create well-paying jobs for Albertans, all while accelerating Canada's progress towards net-zero by 2050."

The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

Quick facts

  • The Canada Growth Fund is a $15 billion arm's length public investment vehicle launched by the federal government to attract private capital and invest in Canadian projects and businesses, which is led by Canada's world-leading public sector pension professionals.

  • Varme and Gibson Energy's waste-to-energy project in Alberta's Heartland-area-the first in Canada-will increase the supply of carbon negative electricity in Alberta by avoiding harmful methane emissions. Governments globally, including the Government of Canada and the Government of Alberta, have identified rapid reductions in methane emissions as key to limiting near-term climate impacts.

  • The Canada Growth Fund investments in clean energy and clean technology are already building Canada's clean economy and creating good-paying jobs across the country. Previously announced Growth Fund investments:

  • The 2023 Fall Economic Statementannounced that the Canada Growth Fund will be the principal federal entity to issue carbon contracts for difference (CCFDs), including allocating, on a priority basis, up to $7 billion of its current $15 billion in capital to issue all forms of contracts for difference and offtake agreements.

    • Industrial carbon pricing is Canada's cornerstone climate policy. By directing the Canada Growth Fund to use carbon contracts for difference as a tool to accelerate investment in decarbonization and clean growth technologies, the government is providing the carbon price certainty needed for industry to reduce emissions on a cost-effective basis.
  • Budget 2024 announced that the Canada Growth Fund is developing an expanded range of CCFD offerings tailored to different markets and their unique risks and opportunities. The Canada Growth Fund will continue offering bespoke CCFDs and carbon offtake agreements, with a focus on provinces contributing significantly to greenhouse gas emissions reductions.

    • The government is also evaluating options to enhance the Canada Growth Fund's capacity to offer CCFDs, including by exploring the possibility of a government backstop of certain CCFD liabilities of the Canada Growth Fund.
  • Budget 2024 also announced that the Canada Growth Fund will explore ways to broaden its approach, for example, by developing off-the-shelf contracts for certain jurisdictions and ways to offer these contracts on a competitive basis for a set amount of emissions reductions.

Contacts

Media may contact:

Katherine Cuplinskas
Press Secretary and Senior Communications Advisor
Office of the Deputy Prime Minister and Minister of Finance
[email protected]

Media Relations
Department of Finance Canada
[email protected]
613-369-4000

General enquiries

Phone: 1-833-712-2292
TTY: 613-369-3230
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