CTC #59 - Feds update on tax credits, carbon contracts & Deep Sky raises for carbon removal

Hey there,

Welcome to another issue of Climate Tech Canada! I hope your neck is recovered from the OpenAI whiplash this weekend.

We had a great turnout for our first climate tech meetup here in Ottawa last week with a great mix of folks looking to join climate tech companies, starting their own ventures, and already working in climate. It’s always awesome to be in a room full of smart people that are motivated to work on climate solutions. I’m looking forward to doing more of these soon!

This week in climate tech:

• Feds share timelines for clean investment tax credits

• Deep Sky raises to build out gigaton-scale carbon removal

• FeX Energy spins out from McGill to build metal fuel energy

Let’s go!

📚 Fall Economic Statement

The federal Fall Economic Statement landed today, with a major focus on housing and affordability as the feds try to get ahead of these two key issues. The updated also touched on Canada’s clean economy investments but it’s not a game changer. It mostly confirmed timelines, clarified past announcements, and hinted at future initiatives.

Carbon contracts for difference: The Canada Growth Fund will use up to $7 billion of it’s $15 billion budget for contracts for difference. These contracts act like an insurance policy against carbon pricing going down or being removed, making investments in carbon removal and decarbonization less risky.

Investment tax credit timelines: Legislation will be tabled this fall for Clean Technology and carbon capture, utilization and storage (CCUS) tax credits. Tax credits for hydrogen and clean tech manufacturing will start consultation in the fall, with legislation expected in “early 2024”. Clean Electricity tax credits won’t get moving until later in the year.

Other notable takeaways:

• The feds want to work with Canadian pension funds to focus on investment opportunities in Canada

• An Indigenous Loan Guarantee Program to facilitate equity ownership in major projects is in the works (with more detail in the next budget)

• And mandatory climate disclosures for private companies are being explored

Overall, the fiscal update was mostly focused on affordability and projecting optimism about inflation coming down. The biggest miss on climate in my opinion is that the ICTs still aren’t here, but at least we have clearer timelines on the table.

💰 Funding

💨 Deep Sky (Montreal, QC) closed $57.5M in Series A funding to build out gigaton-scale carbon removal in Quebec. The round was co-led by Brightspark Ventures and Whitecap Venture Partners, and included a $17.7M seed note from earlier in the year that converted as part of this round. Deep Sky is building out a carbon removal hub by licensing existing technologies from other carbon removers. The funding will be used to build its first commercial facility, build out carbon credit software, and fund its research facility.

☀️ Enurgen (Ottawa, ON) raised $1.38M in pre-seed funding led by 2048 Ventures for its digital twin technology for solar plants. Enurgen models bifacial solar panels to provide continuous performance benchmarking and increased energy production. Enurgen also took home first prize at the SAAS NORTH Pitchfest competition, along with $10K in prize money.

⛽️ HTEC (Vancouver, BC) received $16.5M from B.C.’s Innovative Clean Energy fund to support a hydrogen fuel pilot for commercial trucking. HTEC designs, builds and operates hydrogen infrastructure and will demonstrate hydrogen fuel trucks for fleet operators in the province.

🚌 Spare Labs (Vancouver, BC) received a $3M interest-free loan from federal economic development agency PacifiCan for its on-demand transit platform. Spare enables transit operators to schedule trips on demand and incorporate mixed modes of transport. The funding will be used for product development and scaling up operations.

🪨 Ucore (Halifax, NS) received a $4.8M grant from the federal government for its critical mineral separation technology. The funding will be used to demonstrate Ucore’s rare earth element platform and validate their solution with manufacturers.

⛽️ Hydron Energy (North Vancouver, BC) received a grant for an undisclosed amount from the Natural Gas Innovation Fund to support its waste-to-fuel technology. Hydron is developing a gas upgrader to produce low-cost renewable fuels from biogas.

🔋 Aypa (Toronto, ON) closed $550M in financing to support the deployment of its energy storage portfolio. Aypa is an independent power producer that builds, owns, and operates battery storage and hybrid renewable energy projects.

⛽️ EverWind Fuels (Point Tupper, NS) will receive a $125M loan from the federal government for its wind-powered hydrogen and ammonia project in Nova Scotia. EverWind plans to produce 200K tonnes of green ammonia annually for export to Germany and Europe.

💰 Active Impact Investments (Vancouver, BC) closed $70M in initial commitments for its third early-stage climate tech fund. The fund is backed by new LP Northleaf Capital Partners and Fondaction, and Active Impact is aiming for a total of $120M.

💰 Kinterra Capital (Toronto, ON) closed $565M for its debut fund to invest in critical mineral assets. The private equity firm will invest across the value chain, including battery manufacturing plants, mining operations, processing plants, energy storage and more.

🏅 Milestones & growth

🔥 FeX Energy spun-out from McGill’s Alternative Fuel Laboratory in collaboration with BXVentures to develop metal fuel technology for renewable energy.

🪨 Ideon joined Stanford’s Mineral-X program, a critical mineral supply chain program, to develop their subsurface mineral exploration & identification technology.

🤖 BluWave-ai launched its EV Everywhere product in the Ottawa region and plans for global availability next year to help utilities handle increased load from EV charging.

🚌 Vicinity Motors will partner with autonomous driving platform Adastec to bring an electrified, autonomous transit bus to market.

🔋 Li-Metal successfully produced its first batch of lithium on metalized polymer anodes. The anodes enable lighter and more cost-effective batteries.

📊 Carbon Streaming is restructuring and conducting a strategic review to respond to “changing conditions” in the voluntary credit market with a focus on cash flow.

🔋 Li-Cycle is exploring financing and strategic options after pausing construction on their battery recycling hub factory due to cost increases.

🚗 Exro Technologies received its first order for its Cell Driver battery energy storage system. The pilot order will provide Exro with real world commercial energy data.

🗞️ This week in climate

♻️ Un-banned: Canada’s ban on single-use plastics was overturned by the Federal Court, which found the categorization of all plastic manufactured items as harmful was too broad. The government has limited jurisdiction in this area, and used the List of Toxic Substances under CEPA to implement the ban. The feds are appealing the decision.

🔌 Worry-free charging: A group of 15 EV charging industry partners launched Agora, a nation-wide program that aims to enable roaming across EV charging networks through a single account.

Canada has more than 40 charging networks, and drivers need to have multiple apps or RFID cards on hand to be able to charge. Taking network access out of the equation could dramatically simplify the charging experience.

In other news 

• The future of the Greener Homes Grant program that provides homeowners with grants to do home energy retrofits is up in the air. The $2.6B program is being depleted faster than expected, although NRC said just $450M had been paid out.

• Canada Infrastructure Bank will provide Parkland with up to $210M in financing to add up to 2,000 new chargers across the country.

• Canada’s housing sector could lock in more than 140 Mt of emissions by 2030 without stronger policy measures.

• Amazon will build its first wind farm in Alberta and fourth renewable energy project in Canada to power local operations and data centres.

• CDPQ, Quebec’s public pension plan, will invest $200M in Swedish battery manufacturer Northvolt AB, which is building a giga-factory outside of Montreal.

• China’s emissions could enter structural decline in 2024 following record additions of low-carbon energy and rebounding hydro capacity.

• Exxon is hedging its bets by expanding into lithium extraction. The company will use its oil & gas machinery to extract lithium at a new project in Arizona.

• Germany will put up $8B to bail out Siemens Energy after the company posted a $5B loss. The funding is part of a $16.3B package of guarantees.

• McKinsey & Co is under fire for using its position as a key advisor to COP28 talks to advance the interests of its fossil fuel clients.

📣 What’s going on

💡 Critical Minerals Infrastructure Fund: Applications opened for the $1.5B federal fund to support mining infrastructure deployment and pre-construction activities.

🗓️ Climate Designers of Toronto & the GTA - Virtual Meet & Greet: Join this intro session with the Toronto & GTA chapter of Climate Designers to get to know fellow designers and explore directions for the chapter. Nov 28, online.

🗓️ Energia Ventures Demo Day: Showcasing Energia’s fall cohort with companies in sustainable aquaculture and crop optimization. Dec 7th, Fredericton, NB.

☕️ Here & there

A few of my favourites to help you sound smart this week

• An interactive guide to who wants what at COP 28

• The startup electrifying classic cars

• Canadian miners see opportunity in China’s clampdown on graphite

• Stagnation in Canadian productivity is driven by one factor - the oil sector

• Montreal’s Blue Solutions is blazing a trail for solid-state batteries

• Crystal ball: how and when technologies could reach commercial adoption 

📌 Jobs

Featured postings from Canadian companies building climate solutions across sustainable fisheries, carbon removal, EV charging and more!

➡️ Hiring? List your posting here.

That’s all for this week - thanks for reading! And if you’re enjoying the newsletter, share it with a friend or coworker to help support our work.

Justin