$2 Billion Investment to Decarbonize Oil Sands
The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, welcomes the Canada Growth Fund’s sixth investment, a $2 billion partnership with Strathcona Resources, Canada’s fifth-largest oil producer.
This collaboration aims to construct carbon capture and sequestration (CCS) infrastructure at Strathcona’s oil sands facilities in Saskatchewan and Alberta.
Significant Carbon Reduction Potential
Upon completion, the partnership is projected to capture and permanently store up to two million tonnes of carbon dioxide annually. This groundbreaking initiative paves the way for Canada to become a global leader in low-carbon resource exports.
With an initial investment of $500 million from the Canada Growth Fund, which could potentially increase to $1 billion, Strathcona will initiate the final detailed engineering for the first CCS project. A final investment decision is expected next year.
The project will also benefit from the federal government’s Carbon Capture, Utilization, and Storage (CCUS) investment tax credit.
Financial Structure of the Partnership
The Canada Growth Fund will receive a targeted return on its investment through annual cash flows generated by each CCS project. These cash flows will be based on actual captured volumes, operating costs, and a fixed carbon price guaranteed by Strathcona.
This partnership aligns with the federal government’s economic plan, which emphasizes creating sustainable, well-paying jobs. By investing in clean technology through the Canada Growth Fund, the government empowers industries to decarbonize their operations, fostering a brighter future for Canadians.
Quotes from Key Officials
Deputy Prime Minister Freeland highlights the investment as proof of the government’s economic plan’s effectiveness in growing the economy, creating jobs, and achieving net-zero emissions by 2050.
Minister of Energy and Natural Resources, Jonathan Wilkinson, emphasizes the economic opportunity presented by the decarbonization of the resource sector and the role of investment tax credits in maintaining Canada’s competitiveness.
Canada Growth Fund’s Mandate
The Canada Growth Fund is a $15 billion public investment vehicle designed to attract private capital and invest in Canadian projects aligned with national economic and climate goals. These goals include reducing emissions, accelerating the deployment of key technologies, and scaling up companies for job creation and economic growth.
This partnership significantly advances Canada’s efforts to decarbonize industry while preserving and creating jobs. Strathcona’s oil sands facilities currently produce approximately 3 million tonnes of CO2 emissions per year.
Expanding Carbon Contracts for Difference
The Canada Growth Fund will be the primary federal entity issuing carbon contracts for difference (CCFDs), with up to $7 billion of its capital allocated for this purpose. These contracts will be tailored to different markets and their unique risks and opportunities, focusing on provinces with significant greenhouse gas emissions reductions.
The Canada Growth Fund aims to broaden its approach to CCFDs, exploring options such as developing standardized contracts for specific jurisdictions and offering these contracts competitively for a set amount of emissions reductions.