Canada Growth Fund invests in Entropy carbon capture program

CALGARY — Canada Growth Fund Inc. (CGF) and Advantage Energy Ltd. have announced that CGF has entered into an investment agreement with Entropy Inc. that could lead to over $1 billion in investments in carbon capture and sequestration (CCS) projects.

Entropy is a Calgary-based developer of CCS projects. CGF, created by the federal government as a subsidiary of the Canada Development Investment Corporation, has agreed to a $200-million investment in Entropy as well as a fixed-price carbon credit purchase agreement (Carbon Credit Offtake Commitment or CCO) of up to one million tonnes per year.

The initial allocation of CCO commitment will allow Entropy to proceed with its Glacier Phase 2 project, targeting the sale of up to 185,000 tonnes per annum of Alberta TIER carbon credits at an initial price of $86.50 per tonne for a term of 15 years.

The structure of the deal helps to de-risk and accelerate private CCS investment by establishing carbon price certainty for Canadian projects, stated a Dec. 20 release.

In March 2022, Entropy announced a ]$300 million investment agreement with Brookfield, via the Brookfield Global Transition Fund, to scale up the deployment of Entropy’s CCS technology globally.

Post-investment, Entropy will have approximately $460 million of capital available which, together with investment tax credits, carbon capture incentives and project financing, could lead to over $1 billion of CCS projects and abate more than 1 million metric tonnes per annum of emissions, with a focus on the Canadian market.

“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 CCS industry,” said Patrick Charbonneau, CEO of Canada Growth Fund Investment Management Inc. “The CGF 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.”