Canada’s First Carbon Policy Contract for Difference in Markham announced

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Canada’s First Carbon Policy Contract for Difference in Markham announced
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MARKHAM, ONT. — Canada Growth Fund Inc. and Markham District Energy Inc. , an operator of district energy networks in the City of Markham, Ont., have entered a financial hedge to enable new investment in the energy sector in Ontario.

MDE is building a heat pump system that harnesses the steady temperature of a nearby sewer as a heat sink for thermal energy and replaces existing technologies that burn natural gas, indicates a release. The transaction advances important heating and cooling technologies, which could unlock further decarbonization opportunities across Canada in the hard-to-abate low-grade heat sector, states the release,.A carbon policy CfD is a financial instrument that provides certainty related to the financial impact of future carbon policy prices, measured against specified volumes of carbon emissions reductions.

The carbon policy CfD is structured as a two-way contract, which means if the actual carbon policy price exceeds the specified strike price, MDE will make payments to CGF. Conversely, if the carbon policy price falls below the strike price, CGF will pay MDE for the difference.

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