A proposed $400 million facility in Edmonton, designed to convert landfill waste into electricity, faces potential cancellation due to a recent carbon tax agreement between the Alberta and federal governments. Originally, there were plans for the national industrial carbon price to reach $170 per tonne by 2030. However, a revised deal last month between Prime Minister Mark Carney and Alberta Premier Danielle Smith now sets the price to hit $130 per tonne by 2040.
Varme Energy, the company behind the waste-to-energy project, is feeling the impact of this policy change. The facility aims to capture greenhouse gases and store them underground while generating valuable carbon credits. With the lowered carbon price, the value of these credits diminishes, putting the project’s viability at risk.
Sean Collins, the CEO of Varme Energy, expressed concerns about the future of the project if there are no further government policy adjustments in the coming months. The company may be forced to abandon the project due to financial challenges.
The agreement signed by Carney and Smith is part of a broader effort to reduce methane emissions, streamline project regulations, and explore a new oil export pipeline to the West Coast. Some large industrial players advocated for a lower carbon price to stay competitive with U.S. counterparts who do not face a carbon tax.
The changes in Alberta’s carbon pricing structure have put pressure on companies like Varme Energy and others in the carbon capture sector. Jamie Stephen, managing director of Torchlight, highlighted the financial strain caused by the revised carbon pricing schedule, making many projects unfeasible.
Varme Energy, a subsidiary of a Norwegian clean energy firm, has received support from the Alberta government and the federal Canada Growth Fund for its project. However, with the operating costs and the reduced carbon price, the financial feasibility of the venture is in question.
As the federal and provincial governments implement the new carbon pricing agreement, the carbon capture sector is hopeful for policy adjustments that would allow for better carbon credit prices in various markets. The sector will closely monitor details such as credit calculations and potential loopholes in carbon tax obligations.
Collins emphasized the urgency for supportive fiscal policies to kickstart construction on the project. Without such changes, the fate of the landfill waste-to-energy initiative remains uncertain, with a potential cancellation looming in the near future.