Yesterday, as part of COP22 taking place in Marrakesh, Fondaction and Coop Carbone announced the creation of one of the world’s largest funds for GHG reduction projects through carbon contracts.
Announced with Quebec Premier Philippe Couillard in attendance, the Fonds Carbone is the first carbon contract fund to be created in Quebec. It will be a $20 million fund dedicated to financing projects to reduce GHGs in exchange for offset credits that will be generated. The fund will be managed by an entity that will be co-owned equally by Fondaction and Coop Carbone. “The Fonds carbone will foster the emergence of the new and innovative market of carbon financing and accelerate the deployment of GHG reduction projects by rounding out the available financing offer,” said Léopold Beaulieu, president and CEO of Fondaction.
The Fonds Carbone is for organizations that want to lead greenhouse gas reduction projects and generate offset credits; for example, mine operators, cattle breeders, forestry operators, companies whose activities require the use of synthetic refrigerants, or GHG reduction project operators. When a project is at the financing stage, the fund will offer a loan by which it will take the offset credits generated by the project as collateral for a certain set period. This loan will first be repaid using the offset credits generated by the project; once the loan has been repaid, the fund will purchase credits for the remaining duration of the project at a price pre-determined in the carbon contract that is below market rates.
The fund will provide financing for 15 to 25 projects. The contract will be for a minimum of $500K and a maximum of $2M. A maximum of 10% of the fund can be invested in the same project and 20% in projects belonging to the same sponsor.
“Quebec has chosen to set the price of carbon, not by creating a new tax, but through the market. We are showing, today, that it is possible to use the carbon market to further stimulate the emergence of GHG reduction projects by Quebec companies while stimulating the purchase of green technologies. Carbon contracts complete the financial offer currently available in Quebec and will be a new way for us to stand out so we remain a leader in the fight against climate change,” indicated Jean Nolet, president of Coop Carbone.