Canada announces deal to backstop carbon credit prices for Entropy CCS project

Advantage Energy

21/12/2023 01:09

By Nia Williams
       Dec 20 (Reuters) - The Canada Growth Fund (CGF), a
federal clean-tech financing agency, on Wednesday said it would
invest C$200 million ($149.72 million) in carbon capture and
storage developer Entropy Inc and backstop carbon credit prices
for the first time.
    Under the terms of the 15-year deal, known as a carbon
credit offtake (CCO) commitment, the CGF has agreed to buy up to
1 million tonnes a year of carbon credits generated by
Calgary-based Entropy, a subsidiary of oil and gas producer
Advantage Energy  AAV.TO .
    The initial commitment will enable Entropy to sell up to
185,000 tonnes a year of credits, generated by the second phase
of a carbon capture and storage project at Advantage's Glacier
gas plant in Alberta, to the CGF at a price of C$86.50 per
tonne.
    Last year the company also agreed a C$300 million investment
deal with infrastructure firm Brookfield.
    "By creating a large-scale CCO to guarantee long-term carbon
pricing and adding C$200 million to our existing Brookfield
funding for third-party projects, Entropy has a clear path to
accelerating growth and reducing emissions, right here at home,"
Entropy CEO Mike Belenkie said in a statement.
    The CGF is a C$15 billion body set up last year by Canada's
Finance Ministry to help attract private investment in clean
tech by mitigating financing risks. 
    Ottawa has been working on ways to provide carbon price
certainty to firms looking to invest in carbon capture and
storage to reduce their emissions, in addition to providing
investment tax credits.
    Canada is the world's fourth-largest crude producer and the
oil and gas sector is its highest-polluting industry, accounting
for more than a quarter of all emissions.
    National Bank analysts said the deal was a "massive
milestone" for Entropy. Dale Beugin, executive vice president
with the Canadian Climate Institute, said the investment will
help minimize risk in clean growth projects and make carbon
pricing work better in Canada.
    "By guaranteeing value for Entropy Inc's carbon credits,
this investment drives emissions reductions, without crowding
out private investment," Beugin said.
    
($1 = 1.3358 Canadian dollars)

 (Reporting by Nia Williams; Editing by Michael Perry)
 ((nia.williams@thomsonreuters.com; +1 403 531 1624; Reuters
Messaging: nia.williams.thomsonreuters.com@reuters.net))