A proposed $400 million facility in Edmonton that aimed to convert landfill waste into electricity is at risk of being scrapped due to a recent carbon tax agreement between the Alberta and federal governments. The initial plan was for the national industrial carbon price to reach $170 per tonne by 2030. However, a revised deal by 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 facing challenges as a result of this policy change. The project, which involves capturing greenhouse gases and storing them underground, would also generate carbon credits for sale. With the lower carbon price, the value of these credits would decrease, putting financial strain on the project.
Sean Collins, the CEO of Varme Energy, expressed concerns about the future of the project if there are no additional government policy adjustments in the coming months. The company may be forced to abandon the project due to financial constraints.
The agreement between Carney and Smith was part of a broader deal to reduce methane emissions, streamline the regulatory process for major projects in Alberta, and explore a new oil export pipeline to the West Coast. Some large industrial players had advocated for a lower carbon price to stay competitive with counterparts in the US, where there is no carbon tax.
The changes in the carbon pricing structure have created financial pressure not only for Varme Energy but also for other carbon capture companies seeking additional support from the government. The altered schedule and lower price have rendered many carbon capture and storage projects in Canada economically unviable.
Varme Energy, a subsidiary of a Norwegian clean energy firm, had secured agreements with the City of Edmonton and provincial permits for electricity production. Despite receiving funding and support, the project’s viability is in question due to the new carbon pricing framework. The company is hopeful that future policy adjustments may allow for better market conditions to proceed with the project.
As the sector awaits further details on the implementation of the new agreement, companies like Varme Energy are urging for supportive fiscal policies to enable project construction. Otherwise, the fate of the proposed landfill waste conversion facility remains uncertain.