Alberta Garbage-to-Energy Project Secures Support of Canada Growth Fund

By Robb M. Stewart

Norwegian clean energy development company Varme Energy has secured a carbon-price backstop contract through the Canada Growth Fund to help accelerate development of a proposed facility in western Canada that aims to turn household waste into energy.

The fund, an arm's length public investment vehicle launched by the federal government to attract private capital to clean-energy projects, said it would provide a carbon price assurance mechanism to buy up to 200,000 metric tons a year of compliance-grade carbon credits generated by the Alberta project.

The credit would be bought at an initial price of 85 Canadian dollars (US$61.77) a ton for a 15-year term, and the project would be able to sell up to 100,000 tons annually of carbon emission reductions into alternative carbon markets.

Under the terms of the strategic agreement, Gibson would end up owning half of the project if the partners agree to a final investment decision, expected early next year, while Canada Growth Fund would own a 40% stake and Varme 10%.

The project, which plans to be Canada's first waste-to-energy facility with carbon capture technology, will be located on Gibson land and have the capacity to process 200,000 metric tons a year of municipal solid waste diverted from landfill. In January, Varme reached a deal with the Alberta city of Edmonton to take about 150,000 tons of residential garbage headed for landfill each year from as early as 2027.

The project plans to combust municipal solid waste and produce carbon-negative electricity. A front-end engineering and design study is underway and the partnership is aiming to commission the facility in 2027.

Canada Growth Fund said the project would benefit from the carbon-credit offtake structure by having its compliance carbon credits de-risked while retaining the ability to sell carbon dioxide removal credits to corporations and brands. The facility would be built by the partnership and operated by Gibson, an operator of crude oil pipelines and storage terminals.

The C$15 billion Canada Growth Fund in late March signed what was its third investment, a C$50 million injection into Montreal-based Idealist Capital aimed at helping businesses commercialize technologies, products and services to accelerate a shift to cleaner energy.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

June 11, 2024 08:30 ET (12:30 GMT)

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