Canada Growth Fund has invested $200 million in an Alberta carbon capture and storage company in conjunction with Brookfield Asset Management.

The investment sets the stage for widespread real estate investments tied to CCS projects in Canada and, potentially, elsewhere. Plans call for federally owned CGF to invest $200 million in Calgary-based Entropy for the development of Canadian CCS projects and for corporate purposes. Once fully draw, CGF’s investment could result in CGF owning approximately 20% of Entropy, according to a Brookfield-issued news release.

CGF’s investment agreement includes a fixed-price carbon credit purchase agreement, or carbon credit offtake (CCO) commitment, of up to one million tonnes per annum (tpa). The initial CCO allocation will allow Entropy to proceed with its Glacier Phase 2 CCS project in Alberta, targeting 185,000 tpa at a price of $86.50 per tonne for 15 years.

“The features of the CCO—notably its large scale and its long-term fixed-price—represent a global first in compliance markets,” said the partners in the news release. “This financeable structure helps to de-risk and accelerate private CCS investment by establishing carbon price certainty for Canadian projects.”

Toronto-based Brookfield will invest the balance of a $300-million investment in Entropy announced in 2022. Once the investment is completed, Brookfield will become Entropy’s largest shareholder and control the company.

Photo: Entropy