New investment fund launched to boost RNG production in Québec

Xebec Adsorption, a global provider of clean energy solutions, and the Fonds De solidarite FTQ (the Fonds), a development capital fund, have joined forces to create the GNR Québec Capital investment fund.

The $20 million (€13.1 million) fund aims to boost renewable natural gas (RNG) production in Québec. Partners, particularly from the agricultural and municipal sectors, will have access to the capital and expertise needed to develop and operate facilities to treat organic waste.

The GNR Québec Capital investment fund believes it could play a “significant catalyst role” in helping to meet government objectives of reducing greenhouse gas emissions and increasing the use of RNG while supporting existing developers.

Last March, the Québec government’s 2020-2021 budget allocated $70 million (€46.1 million) to support RNG production and distribution up to 2022. According to Xebec, this measure follows the passing of regulations in March 2019 mandating the minimum quantity of RNG to be delivered by natural gas distributors at 1% in 2020 and 5% in 2025.

Xebec and the Fonds will each initially invest $10 million (€6.5 million) into the partnership; however, over time, the two firms expect that the partnership could receive an aggregate $100 million (€65.8 million) in equity capital from Xebec, the Fonds and other investors. According to a statement by Xebec, the initiative could - with a 75:25 debt to equity ratio - fund 12-15 RNG projects in Québec with an aggregate investment of $400 million (€263.5 million) over the next 10 years.

Dany Pelletier, vice-president for Investments – Structuring Capital, Energy and Environment at the Fonds, said: “We are proud to once again partner with Xebec to increase the Fonds de solidarite FTQ’s impact in the fight against climate change.

“RNG can accelerate the decarbonisation of sectors such as transportation, home heating and industry, by supporting the circular economy through organic waste responsive management activities.

“This initiative also meets the Fonds’ objectives for a just energy transition by creating jobs and supporting local economies with additional revenue systems for farmers, municipalities, and industry. Xebec is a worldwide leader in renewable gases and we are excited to have them as a partner in this project for the large-scale roll-out of RNG facilities in Québec.”

“Our partnership with the Fonds is a great demonstration of how local players can work together to foster the development of the RNG industry,” commented Kurt Sorschak, president and CEO of Xebec. “When we launched this initiative a few years ago, we realised the need for new and better adapted structures to co-invest, develop and operate these facilities in a professional manner. Québec has become a leading RNG province in Canada and currently has several RNG facilities in operation.

“Considering that new government regulations such as the Clean Fuels Standard, will soon come into force and that the need for a higher RNG content will increase over the next few years, particularly in the utilities sector, we are pleased to partner with the Fonds to accelerate the deployment of RNG infrastructures.

“Going forward, Xebec will seek to create more of these valuable financial partnerships in the field of RNG waste-to-energy conversion in Canada and will continue its mission to bring leading-edge technologies to the sector.”