Deputy Prime Minister welcomes the Canada Growth Fund’s carbon contract for difference to generate more clean energy in Markham

From: Department of Finance Canada

News release

The Canada Growth Fund’s innovative carbon contract for difference will expand affordable, low-carbon energy network to more residents and businesses

June 26, 2024 – Ottawa, Ontario – Department of Finance Canada

Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, welcomed the announcement of the Canada Growth Fund’s fifth investment.

Through a novel form of carbon contract for difference, the Canada Growth Fund is working with Markham District Energy Inc.—the city’s public energy utility and Canada’s fastest growing energy utility—to expand its affordable, clean energy services to more residents and businesses. Markham District Energy’s network delivers reliable, cost-efficient heating and cooling to over 15 million square feet across 240 buildings.

Through a system of underground pipes, energy is delivered to buildings in the form of hot water and chilled water to heat and cool building space. This clean energy network is already attracting major new investments to Markham and reducing greenhouse gas emissions by 35 per cent, with a target of net-zero by 2050.

This carbon contract for difference will help Markham District Energy Inc. generate more clean energy by using Noventa Energy Partners Inc.’s Wastewater Energy Transfer (WET™) technology to extract thermal energy from wastewater. Over the 10-year carbon contract for difference being announced today, the project has the potential to reduce more than 177,000 tonnes of CO2e emissions with an initial price of $100 per tonne of CO2e.

In Budget 2024, the government announced its plan to grow the economy and create good-paying jobs today and for the next generation, including by expanding the Canada Growth Fund’s carbon contract for difference programs to new markets. Through initiatives like the Canada Growth Fund, the government is empowering entrepreneurs and innovators to turn their ideas into success stories, helping to unlock a brighter, more prosperous future.

Quotes

“Our government’s economic plan is focused on building an economy that works for every generation—especially Millennials and Gen Z. Today’s Canada Growth Fund investment will help deliver more affordable, low-carbon heating and cooling, saving residents and businesses on energy bills.”

The Honourable Chrystia Freeland,
Deputy Prime Minister and Minister of Finance

“The City of Markham is proud of our commitment to sustainability and our investment in an industry leading district energy system. The Canada Growth Fund’s Contract for Differences was an important part of our decision to move forward with this project as it protects MDE from any potential future change in the price of carbon.”

Keith Irish,
Markham District Energy (MDE) Board Chair

Quick facts

  • The Canada Growth Fund is a $15 billion arm’s length public investment vehicle launched by the federal government to attract private capital and invest in Canadian projects and businesses, which is led by Canada’s world-leading public sector pension professionals.

  • Carbon contracts for difference accelerate investment in decarbonization and clean technologies by providing the carbon price certainty needed for industry to make investments that are intended to reduce emissions on a cost-effective basis.

  • Carbon contracts for difference guarantee a fixed minimum price of carbon when a company, such as Markham District Energy Inc., undertakes a project to abate its emissions in line with Ontario’s industrial carbon pricing system.

    • If the carbon policy price per tonne of emissions is lower than the strike price set out in the contract for difference, the Canada Growth Fund will pay the difference to Markham District Energy Inc., helping to de-risk its investment in low-carbon energy solutions.
    • If the carbon policy price per tonne of emissions is higher than the strike price set out in the contract for difference, Markham District Energy Inc. would pay the difference to the Canada Growth Fund.

  • The 2023 Fall Economic Statement announced that the Canada Growth Fund will be the principal federal entity to issue carbon contracts for difference (CCFDs), including allocating, on a priority basis, up to $7 billion of its current $15 billion in capital to issue all forms of contracts for difference and offtake agreements.

  • Budget 2024 announced that the Canada Growth Fund is developing an expanded range of CCFD offerings tailored to different markets and their unique risks and opportunities. The Canada Growth Fund will continue offering bespoke CCFDs and carbon offtake agreements, with a focus on provinces contributing significantly to greenhouse gas emissions reductions.

    • Budget 2024 also announced that the Canada Growth Fund will explore ways to broaden its approach, for example, by developing off-the-shelf contracts for certain jurisdictions and ways to offer these contracts on a competitive basis for a set amount of emissions reductions.

Associated links

Contacts

Media may contact:

Katherine Cuplinskas
Deputy Director of Communications
Office of the Deputy Prime Minister and Minister of Finance
Katherine.Cuplinskas@fin.gc.ca

Media Relations
Department of Finance Canada
mediare@fin.gc.ca
613-369-4000

General enquiries

Phone: 1-833-712-2292
TTY: 613-369-3230
E-mail: financepublic-financepublique@fin.gc.ca

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