Canada Growth Fund, a federal clean-tech financing agency, has invested CAD $200m in carbon capture and storage facility Entropy, a subsidiary of oil and gas company Advantage Energy.
Under the terms of the deal named the Carbon Credit Offtake Commitment (CCO), the CAD $15bn Canadian public fund has agreed to buy up to one million tonnes a year of fixed-price carbon credits produced by Entropy for 15 years.
Initially, the Canada Growth Fund will buy up to 185,000 tpa of carbon credits a year for a price of $86.50 per tonne, which are generated by the second phase of carbon capture of Entropy’s Glacier Phase Two project in Alberta.
The balance of the remaining CCO will be available for Entropy to underwrite additional third-party projects on similar terms elsewhere in Canada.
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Patrick Charbonneau, president and CEO of Canada Growth Fund Investment Management, said: “With its abundance of natural resources, access to high-quality geological storage, and sophisticated engineering know-how, Canada is the best place in the world to build a carbon capture and sequestration (CCS) industry.
“The Canada Growth Fund Investment Management team is pleased to deliver this inaugural transaction in Alberta's carbon market, and we look forward to putting additional capital to work across Canada in the months ahead.”
Canada is the fourth largest oil producer in the world and CCS projects in Alberta, such as those by Entropy, are a way to reduce the country’s emissions without cutting production.
However, this has left the Canada Growth Fund, and its fund manager Public Sector Pension Investment Board (PSP Investments) open to criticism by climate campaigners such as Shift Action for Pension Wealth and Planet Health.
In response to the new agreement, the campaign group said on X (formerly known as Twitter): “With this new billion-dollar subsidy for risky, ineffective CCS designed to prolong the use of fossil fuels, the Canada Growth Fund and PSP Investments risk delaying the transition to a zero-carbon economy and locking in catastrophic emissions scenarios."
