Canada Growth Fund to invest $200M in Alberta carbon capture firm

The federal government-backed Canada Growth Fund (CGF) has announced a $200 million investment in Entropy, a Calgary-based developer of carbon capture and sequestration projects.

The deal is coupled with a fixed-price carbon credit purchase agreement of up to one million tonnes per year. According to a news release on Wednesday, the scale and length of the off-take terms represent “a global first in compliance markets” that will spur private investment by establishing price certainty.

Carbon capture technology typically collects CO2 from large, industrial sources of emissions, and injects this material deep underground. Canada’s oil and gas sector is counting on the technology to abate emissions as the federal government prepares to impose a cap on pollution from fossil fuel production in 2026.

However, the International Energy Agency and S&P Global Commodity Insights have recently raised doubts about carbon capture's near-term role in combating climate change.

"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," CGF president and CEO Patrick Charbonneau stated in the news release.

CGF is a $15 billion arm's length public investment vehicle launched by the federal government to lure private capital to Canada’s clean energy economy.

Entropy is majority-owned by Advantage Energy (AAV.TO), a Calgary-based natural gas and light oil producer with assets in Alberta's Montney region.

Entropy CEO Mike Belenkie says the deal announced on Wednesday helps ensure his company’s technology is deployed more quickly in Canada amid the global push to lower emissions.

The investment from CGF follows a $300 million deal with Toronto-based Brookfield Asset Management (BAM.TO)(BAM) last March.

"By creating a large-scale [Carbon Credit Offtake Commitment] to guarantee long-term carbon pricing, and adding $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,” Belenkie stated in the release.

“We believe our projects are likely to advance much more quickly in Canada than any other country in the world."

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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