Remarks by the Deputy Prime Minister on expanding Markham District Energy’s affordable, low-carbon energy network

Remarks by the Deputy Prime Minister on expanding Markham District Energy's affordable, low-carbon energy network

From: Department of Finance Canada

Speech

Markham, Ontario - July 16, 2024

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Thank you.

I'm really glad to be here with Mayor Frank Scarpitti, and Rory Nisan, who is the city councillor for Burlington and the city's Deputy Mayor for the Environment. And I am really glad to be here with the amazing people from Markham District Energy. And I see we have whole generations of people who have been building this and it's wonderful to see that commitment.

And of course, I am really glad to be here with three amazing colleagues from my team, Francesco Sorbara, Helena Jaczek and Leah Taylor Roy. Thank you for being here and thank you for the work you do in your communities.

I want to start by sharing some good news about our Canadian economy: Inflation fell to 2.7 per cent in June. That is very good news for everybody and it's very good news for the people who are here who are builders.

What that means is for six months in a row, inflation in Canada has been within the Bank of Canada's target range. And wages have now outpaced inflation for 17 months in a row.

This is great news for all Canadians, for all working people, and for all people who want to build things. With our fiscally responsible economic plan, our government is doing everything we can to support the Bank of Canada and to help make it possible for the Bank of Canada to lower interest rates as soon as possible. The Bank of Canada lowered interest rates in June, making Canada the first G7 country to lower rates - that's a national accomplishment.

Markham District Energy, as we've seen, is doing some incredibly important, innovative work to reduce Markham's carbon footprint while providing affordable, clean energy services to the people who live and work in this city, and to the people who will live and work here.

The work you do here is becoming increasingly important. The world's major economies are moving at an unprecedented pace to combat climate change. They are reorganizing their economies to create the net-zero industries of today and tomorrow.

That is why our government's economic plan is focused on building a clean economy and creating a new generation of opportunities for Canadian workers and businesses.

And that is why I was pleased today to welcome an important investment in Markham District Energy by the Canada Growth Fund.

Our $15 billion Canada Growth Fund is a key part of our federal government's economic plan. The Canada Growth Fund is led by some of Canada's smartest investors, and is investing in Canadian companies, supporting their development, and helping Canada to attract our share of the trillions of dollars of private capital waiting to be invested in the clean economy of today and tomorrow. Most importantly, those investments by the Canada Growth Fund are helping to create great jobs for Canadians today, while keeping Canada and Markham on track to net zero by 2050.

This investment in Markham is particularly exciting because it is a groundbreaking, world-leading investment. This is the Growth Fund's first investment in Ontario. Through a carbon contract for difference, the Canada Growth Fund is helping Markham generate more clean energy by using a cutting-edge technology that extracts heat from wastewater. This carbon contract for difference provided by the Canada Growth Fund is key to de-risking Markham's investment in low-carbon energy solutions.

This is going to help the people of Markham and the businesses of Markham to save on their energy bills even as it helps Markham to reach net zero. That's what I call a win-win.

Now, I'm going to tell you a little bit about carbon contracts for difference, because they're important for this project, they're important for Markham and they're important for Canada going forward.

Carbon contracts for difference reduce risk for companies investing in clean technologies by guaranteeing the price of carbon or carbon credits for a fixed period of time, regardless of the market price. That means companies don't need to be market traders - they don't need to be hedge fund guys. We give them a guarantee and they know that they can go ahead on that basis.

This tool provides certainty for places like Markham District Energy, and it allows them to make the long-term investment decisions they need to make to grow this amazing city and create good jobs.

This deal with the Growth Fund is set at an attractive and competitive initial strike price of $100 per ton of carbon dioxide.

So far, the Growth Fund has announced carbon contracts for difference with two other companies: Entropy Inc., a geothermal energy company in Calgary, and Varme Energy Inc., a company that is generating power from municipal waste in Edmonton.

And this is exactly why we launched the Canada Growth Fund: to encourage companies like Markham District Energy to de-risk great ideas so that they can invest in big projects and create great jobs for some innovative, entrepreneurial people that you see here in this room today. The construction of this project alone is expected to support 200 well-paying jobs for people across Ontario.

The Canada Growth Fund was launched barely over a year ago and it has already announced six investments that total nearly $2 billion and three world-leading carbon contracts for difference. We are putting Canada where we are meant to be - at the forefront of the global race to attract investment and seize the opportunities of the clean economy.

I am also very glad to announce today that our government is investing an additional $24.9 million in Markham District Energy to help expand Markham's clean energy production so more residents and businesses can save on their energy bills.

Thanks to today's investment, the City of Markham will be able to significantly reduce its reliance on natural gas by installing a new 18.5-megawatt wastewater heat recovery system. The project will reduce emissions by over 700,000 tonnes of carbon dioxide over its lifetime. Adopting this technology is a significant achievement and everyone here - and I think most people here have been involved in this project - should be so proud of the work you have done to get here and to do this. I'm very proud of you.

Today's investment builds on the $135 million in low-cost financing already provided to Markham District Energy through the Canada Infrastructure Bank, which was matched by an additional $135 million in private financing.

This investment, which we announced in November 2022, is helping Markham District Energy expand its service area and support the development of low-carbon energy sources in Markham.

Another cornerstone of our government's economic plan is our $93 billion suite of investment tax credits.

Our investment tax credits are already working to give businesses the certainty and the support they need to make historic investments in Canada that create good jobs while reducing our emissions at the same time. We are also supporting Canadian workers by linking many of our investment tax credits to labour requirements. That is giving businesses an incentive to pay a prevailing union wage and to create apprenticeship opportunities.

We have evidence that our investment tax credits are working and already driving investments in Canada.

Last week, we welcomed an up-to $2 billion investment in Strathcona Resources to build carbon capture and sequestration infrastructure on oil sands facilities in Saskatchewan and Alberta, supported by a $1 billion investment from the Canada Growth Fund.

And thanks to our investment tax credits, Shell Canada is also going ahead with its Polaris carbon capture project in Alberta, which will significantly lower emissions at their Scotford location.

In April, Honda announced their historic $15 billion investment in Ontario to create jobs across the full electric vehicle supply chain. A project made possible by our investment tax credits, and, by the way, a project that requires the work like the work that is being done here in Markham District Energy, because we're going to need more clean energy to drive industry and for Canadian consumers.

Last November, we welcomed an $11.5 billion investment by Dow outside of Edmonton, also supported by our investment tax credits.

These major investments by major international companies were supported by our investment tax credits. And all of these projects will support thousands of good jobs across Canada.

Last month, four of our six investment tax credits were written into law. This gives more certainty to companies that want to create well-paid jobs. And this will attract even more investment to Canada.

Our investment tax credits-and the Canada Growth Fund-are pillars of our government's economic plan. They are creating more jobs for Canadians even as we help innovative entrepreneurial people like the team here, achieve their plans for net zero. They are attracting more investment to Canada. They're creating more good jobs. And they are placing Canada at the forefront of the global race to seize the economic opportunities of today and tomorrow.

In fact, in 2023, Canada attracted the highest per capita foreign direct investment in the G7, and the third most total FDI in the world.

Today, we have the lowest deficit-to-GDP ratio in the G7. We have the lowest net debt to GDP ratio in the G7-an advantage that is expected to hold and is key to keeping our AAA credit rating.

This is compelling economic evidence. It shows that Canada's economy is strong and resilient. And that our economic plan is financially responsible.

It's clear that our government believes in everyone here at Markham District Energy and in the amazing work you are doing.

I'm so excited about what the future holds for this incredible team and for the remarkably talented people who have helped make Markham District Energy a true success story in Canada and an international leader.

I am really proud that our government is helping Markham District Energy to grow and play an important role in this community and in this great province.

Our government is acting now, and acting with purpose.

Thank you very much for your work. Thanks for your dedication. Thanks for your commitment. Thanks for your creativity. We see the past here, but I think today we also see the future, and I am so grateful to everyone here and I look forward to continuing to collaborate with you. Thank you.

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