![]() That has required the agency to find some way of striking deals to guarantee companies a minimum value per abated tonne, make up the difference if carbon credits are trading for below that level, and possibly itself come out ahead if the credits are trading above it. It’s also possible that credits will trade for much lower than that headline price – regardless of the government – if the market is saturated with them.Īs a result, the Growth Fund, which began operations this past summer, has been tasked by Ottawa with using up to $7-billion – nearly half of its budget – for what are referred to as carbon contracts for difference (CCfDs). The basic rationale for such deals is that, while in theory the industrial carbon pricing system should make carbon capture financially viable by enabling companies to generate and trade carbon credits, there is too much uncertainty around how the credit market will take shape for that to be a reliable revenue stream.Īlthough the industrial price is supposed to rise to $170 a tonne by 2030, it’s unclear whether that will in fact happen if there is a change in federal government. That component is geared toward the capital costs of the company, which is also backed by Brookfield Renewable Partners LP, which last year invested $300-million.īut the arrangement around carbon credits will likely attract the most interest across the oil and gas sector and other industries that have been awaiting details on how the Growth Fund intends to deliver on its mandate to guarantee value from carbon-capture projects.Īnd the deal could cause some waves, because the price that Entropy will receive per tonne is considerably lower than what other companies have said is needed to get carbon-capture projects off the ground. The deal also sees the federal agency provide Entropy with $200-million in debt financing, which could be converted to an approximately 20-per-cent equity stake. The idea is that the scale-up will include projects for oil and gas companies other than just Advantage. ![]() Growth Fund officials said that they were drawn to Entropy partly because it is a Canadian technology purveyor that, with the deal in place, should be able to scale up in this country rather than being drawn to the United States or other jurisdictions that offer larger subsidies than are available here. And it gives the option of further expanding that by another 400,000 tonnes a year, which would bring it to one million annually. ![]() The agreement commits the Growth Fund to purchasing credits from subsequent Entropy carbon-capture projects, on similar terms, up to a total of 600,000 tonnes annually. ![]()
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