A proposed $400 million facility in Edmonton that aimed to convert landfill waste into electricity may face cancellation due to a recent carbon tax agreement between the Alberta and federal governments. Initially, the national industrial carbon price was projected to increase to $170 per tonne by 2030, but a revised deal last month by Prime Minister Mark Carney and Alberta Premier Danielle Smith altered this, setting the price to reach $130 per tonne by 2040 instead.
Varme Energy, the company behind the waste-to-energy project, is now in a challenging position because of this policy change. The facility’s plan included capturing greenhouse gases and storing them underground, with the intention of generating and selling carbon credits. However, the decreased carbon price would diminish the value of these credits.
Sean Collins, the CEO of Varme Energy, expressed concerns about the project’s future without additional government policy adjustments. He emphasized the urgency, stating that the company might be forced to abandon the project if changes are not made soon.
The agreement between Carney and Smith was part of a broader deal to reduce methane emissions, streamline regulatory processes for major projects in Alberta, and explore a new oil export pipeline to the West Coast. This move came as a response to pressure from certain large industrial companies seeking a lower carbon price to maintain competitiveness against counterparts in the US.
The altered carbon pricing structure poses challenges for carbon capture projects in Canada. Varme Energy is among various companies feeling the financial strain following these changes, with calls for additional support from both levels of government.
The sector is hopeful for policy adjustments that would enable selling carbon credits in different markets to improve pricing, potentially including the US, international markets, or Canada’s own market linked to the Clean Fuel Regulations.
As Varme Energy awaits potential fiscal policy changes to support the sector, the company faces critical decisions regarding the future of its proposed project. If supportive policies are not introduced, the project may be canceled later this year, affecting the team’s dedication to a landfill-free future and their role in achieving that vision.
