Commercial, Finance, Sourcing Renewables  -  January 4, 2024

Canada Growth Fund Completes Second Investment

The Canada Growth Fund completed a precedent-setting long-term fixed price carbon credit offtake agreement of up to 1 million tons annually.

The Growth Fund’s $200 million direct investment and complementary carbon contract was made for a carbon capture and sequestration company, Calgary’s Entropy Inc., according to an announcement by the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance.

It will serve to support Entropy’s pipeline of future carbon capture and sequestration projects in Canada, which could reduce emissions by up to 9 million tons over 15 years.  

“Our government’s economic plan is making significant investments in the future of our economy—and in the good-paying jobs that innovative and growing Canadian companies are creating,” said Honourable Chrystia Freeland. “Today’s investment in Entropy by the Canada Growth Fund is great news for Alberta, for Canada, and for the workers who are helping to build a cleaner, stronger economy from coast to coast to coast.”

Entropy, in partnership with the University of Regina, developed a first-of-its-kind modular carbon capture, utilization, and storage technology to reduce emissions in hard-to-abate industries.

This investment by the Growth Fund will enable Entropy to scale-up its technology to reduce emissions at Advantage Energy’s Glacier Phase 2 plant in Alberta’s Peace Country by approximately 2.8 million tons over 15 years.

To provide Entropy with the certainty needed to make its investment decision in Glacier Phase 2, the Growth Fund will—in addition to the $200 million direct investment—purchase up to 185,000 tons per year of carbon credits for 15 years at an initial price of $86.50 per ton. 

Carbon credit offtake agreements de-risk emissions-reducing investments by guaranteeing the purchase of carbon credits for abated emissions at a fixed price.

Beyond Glacier Phase 2, the investment allows for the Growth Fund and Entropy to further reduce emissions with additional carbon credit offtake agreements for future Canadian projects that use Entropy’s carbon capture, utilization, and storage technology. 

This project could also benefit from additional federal support through the Carbon Capture, Utilization, and Storage investment tax credit, which was introduced in Parliament in the Fall Economic Statement Implementation Act, 2023.