Government guarantees price of carbon for Canadian-made carbon capture technology
Calgary – In Calgary,Chrystia Freeland, Deputy Prime Minister and Minister of Finance, welcomed the announcement of the second investment by the Canada Growth Fund—and the world’s first carbon credit offtake agreement of its kind. The Growth Fund’s $200 million direct investment and complementary carbon contract for difference in a world-leading carbon capture and sequestration company, Calgary’s Entropy Inc., will support more than 1,200 good jobs for Albertans and grow the company’s Canadian-based activities.
Entropy, in partnership with the University of Regina, has 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 tonnes over 15 years, as well as commercialize its proprietary technology for implementation at future projects in Canada and around the world.
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 tonnes per year of carbon credits for 15 years at an attractive, precedent-setting initial price of $86.50 per tonne. 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.
Beyond Glacier Phase 2, this 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. The Growth Fund has provided Entropy with a precedent-setting large-scale, long-term, fixed price carbon credit offtake framework of up to 1 million tonnes per year. This offtake commitment will support Entropy’s pipeline of future carbon capture and sequestration projects in Canada, which could reduce emissions by up to 9 million tonnes over 15 years.
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.
“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. 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.” – Chrystia Freeland, Deputy Prime Minister and Minister of Finance