Ottawa invests $25 million in B.C.-based startup to help build 'Silicon Valley of carbon capture industry'
The investment comes as a 'contribution' to Svante, some of which is forgivable, the Financial Post has learned
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The federal Minister of Science, Innovation and Industry François-Philippe Champagne on Wednesday plans to announce a $25-million investment in Svante Inc., a Burnaby, B.C., company that helps capture carbon from industrial cement, steel, and other manufacturing plants, the Financial Post has learned.
The $25-million investment comes as a “contribution” to Svante, some of which is forgivable, according to a government source, who spoke on condition of anonymity because the news was not yet public.
Claude Letourneau, chief executive of Svante, said his company “needed” the $25 million to execute its playbook, which includes building a small-scale manufacturing facility in Vancouver — or as he called the “Silicon Valley of the carbon capture industry.”
“We’ve been talking to the government for the last year or so,” Letourneau said.
He said the company sees its future as closely tied to Alberta’s emerging hydrogen economy: For every ton of blue hydrogen produced, Letourneau estimated 10 tons of carbon dioxide are produced, which his company could capture.
The technology also has applications for cement, which the federal government has said accounted for an estimated seven per cent of global CO2 emissions in 2019.
“We need cement to build bridges and buildings,” he said. “That’s not going to go away.”
It will mark the second time this week that the federal Liberals have announced an investment in a private company from their $8 billion ‘net zero’ strategic innovation fund, which aims to help decarbonize Canada’s industrial sector.
“They’re already producing their technology,” the government source said, “and this is really to help them scale up the commercialization of it, allow for production at a much larger scale.”
On its website, Svante says it has raised more than $175 million since being founded in 2007, and has operating projects with a number of companies including Husky Energy (now owned by Cenovus Energy Inc.), Chevron Technology Ventures, Total S.A. and LaFargeHolcim.
Earlier this year, Suncor Energy Inc., which previously worked with Svante, invested $25 million as part of a $100 million series D fundraising. Former U.S. Secretary of Energy Steven Chu sits on its board.
According to the company, instead of using traditional liquid adsorbent materials to capture carbon dioxide, it has designed a patented solid-adsorbent based system that can quickly capture emissions for storage or industrial use, at what it says is a lower cost than competitors.
The government did not release the terms of the investment, but the source said Svante must invest a minimum of $205 million in research and development, create 23 new jobs, maintain 102 jobs and employ 124 co-op positions.
Svante must repay a portion of the government’s $25-million contribution — which comes from the ‘net zero’ fund, doled out over seven years — but part of it is forgivable if the company meets its commitments as outlined in an agreement.
On Monday, Prime Minister Justin Trudeau travelled to Sault St. Marie, Ont., to announce as much as a $420-million investment, including $200 million from the same ‘net zero’ fund in Algoma Steel Inc., so it can phase out coal-fired steelmaking and convert to less carbon-intensive electric arc furnaces.
“This is equivalent to taking more than 900,000 passenger vehicles off the road — almost the number of passenger vehicles in Toronto,” a press release stated.
The project is expected to create 500 jobs during construction, including sub-contracting, according to the release.
In May, Champagne travelled to Quebec to announce a partnership with the Cement Association of Canada to “advance global leadership in low-carbon concrete production.”
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“Industrial decarbonization is neither cheap nor easy,” said Sarah Petrevan, senior policy advisor at Clean Energy Canada, a think tank at Simon Fraser University. “We shouldn’t sit back and think it is.”
Petrevan added that the contributions are in line with what other countries are doing and it makes sense for government to help carbon-intense industries transition to a low-carbon economy.
But she said she would still like to see a more specific “industrial decarbonization strategy” that lays out which industries make the most sense for investment, and where “Canada can carve out its niche.”
Financial Post
• Email: gfriedman@postmedia.com | Twitter: GabeFriedz
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