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Canada Growth Fund enters carbon policy CfD for Ontario project

The 10-year contract for difference enables investment in a new heat pump system in the city of Markham.

Canada Growth Fund Inc. and Markham District Energy Inc., an operator of district energy networks in the City of Markham, Ontario, announced they have entered a financial hedge to enable new investment in Ontario’s energy sector.

This 10-year contract for difference enables MDE’s investment in a new heat pump system that will provide residents in the City of Markham with reliable, efficient, and cost-competitive low carbon energy services, according to a news release.

MDE supplies homeowners and businesses in Markham with heating and cooling services. MDE is building an innovative heat pump system which harnesses the steady temperature of a nearby sewer as a heat sink for thermal energy and replaces existing technologies that burn natural gas. During its construction period, the Project is estimated to support up to 200 jobs in Ontario. The Project has the potential to reduce approximately 177,400 tonnes of CO2e emissions over the 10-year CfD term.

“This agreement with Markham District Energy advances CGF’s mandate to establish innovative financial instruments to support Canadian businesses and projects as they adopt key emission reduction technologies,” said Patrick Charbonneau, President and CEO of CGF Investment Management. “Through this contract for difference, CGF is enabling a project that will lower the carbon footprint for heating and cooling energy supplied to customers connected to the district energy system in Markham.”

This transaction advances important heating and cooling technologies, which could unlock further decarbonization opportunities across Canada in the hard-to-abate low-grade heat sector. CGF has a mandate to accelerate emissions reduction technologies in Canada, including by providing CfDs to mitigate policy risk and price volatility and by improving economic outcomes associated with decarbonization projects.

“With the help of Canada Growth Fund, Markham District Energy is now in a position to make a final investment decision on our innovative wastewater heat recovery project,” said Bruce Ander, President and CEO of MDE. “This project will materially reduce our carbon emissions and will support our path to becoming a net-zero carbon utility while providing our customers with competitively priced and reliable thermal energy. A winning outcome for CanadaMarkham and our customers.”

CGF’s CfDs are designed to be replicable and scalable over time, which enhances their potential for broader market applications. By seeking to create a standardized financial instrument, CGF aims to promote price discovery, market liquidity, and capital recycling, allowing for greater investments in decarbonization projects across Canada.

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