$400M carbon capture project at risk over lower carbon price

A $400-million waste-to-energy facility planned for Edmonton is on life support after a carbon tax agreement between Alberta and Ottawa last month slashed the project's financial viability.

Varme Energy, the project developer, was counting on a federal carbon price rising to $170 per tonne by 2030 to generate revenue from carbon credits. But the revised deal between Prime Minister Mark Carney and Premier Danielle Smith caps the price at $130 per tonne by 2040 instead.

The project would convert landfill waste into electricity while capturing and storing greenhouse gases underground. It already has agreements with the City of Edmonton's landfill and provincial permits to produce power. However, the company's operating cost sits around $118 per tonne — a number that penciled out under the old pricing but leaves little margin under the new deal.

"Unfortunately, nobody has runway forever," said Varme Energy CEO Sean Collins. "We're calling a mayday to Ottawa and we hope they listen."

Ross Linden-Fraser, a researcher with the Canadian Climate Institute, said the lower carbon price will reduce investment in emissions reductions across Alberta. "It's just the reality of what happens when you set a lower value on one of the main sources of revenue for emissions-reducing projects," he said.

Varme already received funding from the Alberta government and support from Ottawa's Canada Growth Fund to ensure credits sell for at least $85 per tonne. Without further government policy changes in the coming months, Collins warned the company may have to abandon the project.