A major clean energy project that has taken five years to develop and promises to transform Edmonton's landfill waste into electricity is facing cancellation due to a recent shift in federal climate policy.
Varme Energy's proposed $400-million facility would convert garbage into steam-generated power while capturing greenhouse gases for underground storage. The company had already secured agreements with the City of Edmonton's landfill, provincial permits to produce electricity, and backing from the Alberta government and the federal Canada Growth Fund.
But a carbon tax agreement struck last month between Prime Minister Mark Carney and Alberta Premier Danielle Smith has put the project in jeopardy. The revised deal reduces the industrial carbon price target to $130 a tonne by 2040—down from the previous federal plan to reach $170 a tonne by 2030.
The Math No Longer Works
For Varme Energy, the lower carbon price target means the company's revenue from selling carbon credits has evaporated. The facility's operating costs run approximately $118 a tonne—a figure that made financial sense under the old federal carbon pricing schedule. With the new, slower price trajectory, the project's economics have crumbled.
"Unfortunately, nobody has runway forever," said Varme Energy chief executive Sean Collins in an interview. "We're in a very challenging financial situation."
"We're calling a mayday to Ottawa and we hope they listen. Ottawa: We have a revenue problem. And the solution to a revenue problem is revenue." — Sean Collins, Varme Energy CEO
Collins stressed that the project aligns with stated federal priorities: attracting foreign investment, reducing emissions, and generating clean electricity. Varme Energy is a subsidiary of a Norwegian-based clean energy company that operates similar waste-to-energy facilities internationally.
Industrial Pressure Behind the Deal
The Carney-Smith agreement was reached as part of a broader arrangement to reduce methane emissions, speed up regulatory approvals for major provincial projects, and pursue a new oil export pipeline to the West Coast. Large industrial companies had lobbied for a lower carbon price to remain competitive with American counterparts not subject to carbon taxation.
Ross Linden-Fraser, a researcher with the Canadian Climate Institute, warned that a slower, lower carbon price trajectory will reduce investment in emissions-reduction projects across the country.
"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," Linden-Fraser explained.
Collins indicated the company will make a final decision on the project within months. Without additional government policy support, Varme Energy may be forced to abandon the initiative entirely.
This story is based on reporting from CBC Calgary. For the original article, visit CBC News.