‘Markham leads the way’: Canada Growth Fund backs Markham’s carbon reduction project

Canada Growth Fund Inc. (CGF) and Markham District Energy Inc. have entered a landmark 10-year contract aimed at advancing Ontario’s energy sector.

The contract, known as a contract for difference, will fund Markham energy’s development of a new heat pump system, delivering reliable and low-carbon energy services to Markham residents.

The innovative carbon policy operates as a two-way contract: if the actual carbon policy price exceeds the specified strike price, Markham energy pays Canada Growth Fund Inc.

Conversely, if the price falls below the strike price, Canada Growth Fund Inc. compensates Markham energy for the difference. The contracts are designed to reduce policy risk and price volatility, thereby improving economic outcomes for decarbonization projects.

The contract with Markham energy sets an initial price benchmark of $100 per tonne of CO2, with adjustments over the 10-year term based on Ontario’s carbon pricing system. This innovative approach not only supports the energy company’s sustainability goals but also paves the way for similar projects across Canada.

“This agreement with Markham District Energy is a significant step forward in CGF’s mission to support Canadian businesses adopting emission reduction technologies,” said Patrick Charbonneau, president and CEO of CGF Investment Management.

This first-of-its-kind agreement enables Markham energy to create a new heat pump system, supporting more than 200 jobs and reducing about 177,000 tonnes of CO2 emissions over the next decade, Charbonneau explains.

Markham District Energy, which currently provides heating and cooling services to local homes and businesses, will leverage this funding to implement the Wastewater Energy Transfer technology from Noventa Energy Partners Inc.

As the cutting-edge solution for extracting thermal energy from wastewater, the system will extract thermal energy from nearby sewage, replacing older natural gas-based technologies, unlocking further decarbonization opportunities across Canada, especially in the challenging low-grade heat sector.

“With the support of Canada Growth Fund, Markham District Energy can now proceed with our innovative wastewater heat recovery project,” said Bruce Ander, president and CEO of MDE.

“This initiative will significantly cut our carbon emissions, helping us move toward becoming a net-zero carbon utility while ensuring our customers receive reliable and competitively priced thermal energy.”

By standardizing financial instruments like specialized contracts, Canada Growth Fund Inc. aims to promote price discovery, market liquidity, and capital recycling, fostering greater investments in decarbonization projects nationwide.

Scarlett Liu, Local Journalism Initiative Reporter, Markham Economist & Sun