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A Calgary-based carbon capture company is receiving a major $200 million investment from the federal government, coupled with a carbon credit agreement that intends to de-risk investment in carbon capture.
The Canada Growth Fund (CGF) and Alberta oil and gas company Advantage Energy Ltd. announced the deal Wednesday morning, which will invest the funds in Entropy Inc., a subsidiary of Advantage.
It’s just the second investment the CGF — Ottawa’s $15-billion clean tech financing agency — has made to date; its first was announced in late October, with $90 million going to Calgary-based geothermal company Eavor.
A key element of the agreement is a fixed-price carbon credit purchase agreement — called a Carbon Credit Offtake Commitment (CCO) — of up to one million tonnes per year.
The initial allocation of the agreement targets the sale of up to 185,000 tonnes per year of carbon credits at an initial price of $86.50 per tonne, lasting over a 15-year term. Those credits will come from Advantage’s Glacier gas plant, the company’s first carbon capture utilization and storage (CCUS) project.
Reaching that one million tonnes-per-year mark will happen through future Entropy CCUS projects on similar terms, up to 600,000 tonnes per year, with the option of expanding by 400,000 annual tonnes for other future projects.
The deal could result in the CGF owning about 20 per cent of Entropy.
According to a news release, Entropy will have approximately $460 million of capital available at the end of the investment which, combined with investment tax credits, CCUS incentives and project financing, creates a path to execute $1 billion of CCUS projects and abate over 1 million metric tonnes per year.
Dale Beguin, executive Vice President with the Canadian Climate Institute, said the carbon off take agreement is a massive win for strengthening Alberta’s carbon credit market.
“If firms don’t expect credits to be valuable, private investment won’t flow into low-carbon projects. By guaranteeing value for Entropy Inc’s carbon credits, this investment drives emissions reductions, without crowding out private investment,” he wrote in a statement.
In March 2022, Entropy announced a $300 million investment agreement with Brookfield Asset Management, a global alternative asset manager with more than $850 billion of assets under management.
X: @mattscace67
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