Articles

Alberta Utilities Commission approves first industrial waste-to-energy facility with carbon capture in Canada

Authors:  and | October 2025 – Volume 13, Issue 3, 2025

The Alberta Utilities Commission (the “Commission”) recently approved the construction and operation of the Heartland Waste-to-Energy Facility (the “Facility”) pursuant to sections 11 and 19 of the Hydro and Electric Energy Act.[1] The Facility is a powerplant that utilizes waste-to-energy technology combined with carbon capture and storage technology. The Commission found that the approval of the Facility is “in the public interest having regard to its social, economic, environmental and other effects” in accordance with Section 17 of the Alberta Utilities Commission Act.[2] The approval by the Commission is solely for the electrical components that comprise the power plant equipment.[3]

1. DECISION SUMMARY

A. Facts

The total generating capability of the Facility is 19.6 MW and the Facility will be fuelled by approximately 205,000 tonnes per year of municipal solid waste obtained from the City of Edmonton.[4] The Facility’s generator terminals will export 5.8 MW to the Alberta Interconnected Electric System and the remaining 10.4 MW will be supplied to the Facility’s carbon capture package.[5] Varme Energy Inc. (“Varme”), which was granted the approval, expects to commence construction in Q3 of 2025 and to have an in-service date in Q2 of 2028. The Facility will be located the Alberta Industrial Heartland Industrial Area.[6]

B. Issues & Findings

a. Is the Facility compliant with The Commission’s Rule 007: Applications for Power Plants, Substations, Transmission Lines, Industrial System Designations, Hydro Developments and Gas Utility Pipelines?

The Commission ruled that the requirements for Rule 007 were met, specifically because of Varme’s participant involvement program. That program included notification and consultation with directly and/or adversely affected stakeholders such as landowners, occupants, and residents.[7] 

b. Is the Facility compliant with The Commission’s Rule 012: Noise Control, Section 2.7?

The Facility was found to be compliant with Rule 012 or to meet the Northeast Capital Industrial Association (NCIA) specific no net increase requirement.[8] In the NCIA region, the generally accepted method for noise impact assessments is to consider noise levels from the proposed Facility alone, without assessing the noise levels in combination with existing facilities in the NCIA region.[9] Cumulative sound levels are the sum of baseline sound levels and noise levels from the Facility.[10] Baseline sound levels are the sum of ambient sound levels and noise levels from existing facilities in the NCIA region.[11] Some receptors in the region already exceed permissible sound levels (“PSLs”).[12]

The Commission accepted the noise impact assessment’s prediction that the noise levels from the proposed Facility alone in combination with ambient sound levels will be compliant with the PSLs at all receptors.[13] However, based on predictive results, the cumulative sound levels were compliant with Rule 012 at all receptors except R01.

At R01, the Commission acknowledged that the cumulative sound level exceeds the nighttime PSL because the corresponding baseline sound level already exceeds the acceptable PSL and that the sound level increase resulting from the proposed Facility is no greater than 0.4 decibels.[14] In this case, the Commission found that the requirement by the Commission in its endorsement of the NCIA’s regional noise management plan could apply.[15] The requirement was developed in response to the NCIA’s concerns that development in areas on the fringe of the regional noise model area would not be allowed if proposed facilities result in an increase over the background noise levels in the region.[16] The Commission responded in a letter dated October 16, 2023 that in circumstances where meeting the Rule 012 PSLs is not effective, there should be no net sound increase at nearby receptors above the baseline case.[17]

Given this, the Commission found that the noise from the Facility is expected to comply with the Rule 012 PSLs or to meet the no net increase requirement for the NCIA’s regional noise management plan.[18]

c. Is the Facility compliant with the Alberta Wetland Mitigation Directive?

The Facility was found to be compliant with the Alberta Wetland Mitigation Directive.[19] The Commission accepted Varme’s submissions that the Facility was designed to be as small as possible to minimize the impact to wetlands, that siting the Facility within the Industrial Heartland Designated Industrial Zone necessarily limits the impacts on wetlands, and that wetland compensation offsets would be paid.[20]

Further, the Commission imposed the condition that approval of the project under the Alberta Environment and Protected Areas’ (“AEPA”) Water Act must be filed with the Commission when available and will include the Wetland Assessment Impact Report submitted to the AEPA.[21]

d. What are the impacts to Air Quality in the Region?

The Commission recognized that site-specific emissions limits are subject to AEPA’s approval under the Environmental Protection and Enhancement Act (“EPEA”) because the Facility uses municipal waste as the source of its fuel.[22] The use of municipal waste renders some routine air emissions standards inapplicable.[23] In particular, the Multi-Sector Air Pollutants Regulation limits on NOx emissions is only applicable for boilers fueled by gaseous fossil fuels.[24] For the same reason, the emission requirements for NOx in the Air Emissions Requirement Policy for the Industrial Heartland Designated Industrial Zone do not apply.[25] The triggering of the EPEA approval process is discussed below.

The air quality report submitted by Varme predicted the expected impact of the Facility and was accepted by the Commission.[26] The report indicates that the Alberta Ambient Air Quality Objectives are met within the modelled area based on the predicted maximum emissions for a day (accounting for all nearby sources), notwithstanding two exceptions.[27] Those exceptions are fine particulate matter (PM2.5) and sulphur dioxides (SO2), as the ground-level concentrations of both substances exceed the maximum emissions.

However, the Commission accepted that these exceedances are due to the fact that the Facility is located in an area of concentrated emissions sources. It worked in the Facility’s favour that the locations of the maximum ground level concentrations for PM2.5 and sulphur dioxides SO2 are distant from the Facility stack, and that this siting is desirable compared to alternative locations outside the industrial zone.[28]

The Commission once again approved the impacts to air quality on the condition of approval by Alberta Environment and Protected Areas.[29] Industrial application approval under the EPEA must be filed with the Commission for the Facility to be approved by the Commission.[30]

Similarly, the carbon capture, process water recycling, waste management and flue gas treatment system components of the Facility were held to be under the purview of the EPEA.[31]

e. Does Varme have a suitable reclamation security program?

Varme’s approach to reclamation was found sufficient to satisfy the Commission that the Facility’s approval is in the public interest.[32] The Commission accepted Varme’s submission that the Facility reclamation security is to be provided to the AEPA in accordance with the Waste Control Regulation under the EPEA.[33] The conditions of the EPEA approval will incorporate Varme’s legal obligation to carry out reclamation of all Facility components.[34]

The security to be provided to AEPA is estimated at $889,455.03. The Commission accepted that this amount would be sufficient to reclaim all the power plant components of the Facility because Varme submitted that the salvage value would cover a significant portion of the estimated reclamation costs.[35]

f. The Commission’s Conclusion

The Commission approved the application for the electrical components that comprise the power plant equipment.[36] It made no approvals over the carbon capture and process water recycling components of the Facility.[37]

2. THE EPEA APPROVAL PROCESS IS TRIGGERED BY THE FACILITY’S ACTIVITIES

The Facility is still subject to AEPA approval.[38] Despite the small size of the Facility, the Facility is governed by the EPEA as a waste-to-energy facility requiring and EPEA approval.

By combusting municipal solid waste, the powerplant will emit NOx. NOx emissions are regulated by the EPEA through the Alberta Ambient Air Quality Objectives (“AAAQOs”) which set specific limits for NOx concentrations in the air. The AAAQOs are developed under Section 14 of the EPEA.[39]

The development of the Facility involves potential impact to wetlands meaning that EPEA is also triggered because of the use of the land. However, the Commission found that approval was conditional on approval under the Water Act by the AEPA, including the Wetland Assessment Impact Report.

3. THE HEARTLAND WASTE-TO-ENERGY FACILITY IS A FIRST OF ITS KIND FACILITY IN CANADA

This decision is significant for several reasons, one of which is that the Heartland Waste-to-Energy Facility will be the first industrial-scale waste-to-energy Facility with carbon capture in Canada.[40] Waste-to-energy facilities are also not new to Alberta.[41] Currently, there are 7 projects which fall under the Government of Alberta’s Energy Generation from the Combustion of Biomass Waste Protocol.[42] However, none of these projects capture and sequester the associated carbon dioxide emissions.[43] The addition of carbon capture and storage infrastructure enables the Facility to secure financial incentives from the federal government and the Province of Alberta and to generate carbon emission offsets that may be sold to third parties on compliance or voluntary carbon markets.

The development of carbon capture and storage projects in Alberta is incentivized by federal and provincial government support.

The federal government has implemented a refundable tax credit aimed at incentivizing carbon capture, utilization, and storage (“CCUS”) through the CCUS investment tax credit (“CCUS ITC”) regime under the Income Tax Act (Canada).[44] The CCUS ITC is initially set at 50% for qualified capital expenditures incurred to capture carbon dioxide and 37.5% for qualified capital expenditures incurred to transport and store carbon dioxide up to December 31, 2030 and is reduced by 50% for 2031–2040.[45]

Around the same time, the Province of Alberta announced its CCUS incentive program: Alberta’s Carbon Capture Incentive Program (“ACCIP”). Through ACCIP, the Province expects to commit an estimated CA$3.2 to CA$5.3 billion of support between 2024 and 2035 to the development of new CCUS infrastructure. ACCIP will provide a 12% grant for new CCUS capital costs for qualifying projects physically located in Alberta.[46] Alberta has a strong track record of supporting CCUS. The Province has invested over CA$1.8 billion in projects to capture carbon dioxide.[47]

Governments in Alberta have also supported the Facility itself, with the City of Edmonton awarding the contract to Varme in January 2024.[48] Additionally, the Facility is the culmination of a front-end engineering and design study led by Varme and funded in part by the Government of Alberta, which provided $2.8 million through Emissions Reduction Alberta.[649]

Government incentive programs like CCUS ITC and ACCIP are crucial to the development of CCUS in Alberta. The industries which are expected to benefit from this support are industries such as the Alberta oil sands, petrochemicals, manufacturing, cement and power generation.[50] These industries could make significant emissions reductions by using CCUS technology.

4. THE FACILITY SIGNALS THE POSITIVE IMPACT OF CARBON MARKETS

The development of the Facility is one indicator that carbon markets and government supports are achieving their common goal of driving innovation and the use of carbon reduction technologies.

The Facility is expected to be eligible to generate carbon emission offsets for both the waste-to-energy process and the carbon capture and storage process on compliance or voluntary markets.

Under Alberta’s Technology Innovation and Emissions Reduction Regulation (“TIER”),[51] waste-to-energy projects are eligible to generate carbon emission offsets pursuant to the Energy Generation from the Combustion of Biomass Waste[52] protocol. By diverting feedstock from landfills and avoiding greenhouse gas (“GHG”) emissions, projects can realize on emission offsets opportunities.[53] In addition, carbon emission offsets can be generated from the capture and storage of carbon dioxide emissions pursuant to the Quantification Protocol for CO2 Capture and Permanent Geologic Sequestration[54] issued under TIER. Accordingly, the Facility could generate valuable emission offsets from two carbon reduction activities under TIER which can be sold on the Alberta Emissions Offset Registry to support project economics.

Alternatively, emission offsets generated through the production of bioenergy with carbon capture and storage are highly sought after in the voluntary carbon offsets market. Businesses looking to voluntarily reduce their GHG emissions and meet their sustainability or net-zero targets may pay a premium to purchase these credits in these voluntary markets.

5. GOVERNMENTAL INCENTIVES AND CARBON MARKETS LEAD TO NEW PROJECTS AND INNOVATIONS

The Facility is one of several examples of how governmental incentives and carbon markets can lead to innovation and technological developments in the Province. CCUS ITCs and the ACCIP program provide strong incentives to encourage investment in CCUS in Alberta. By incentivizing the development of carbon emission reduction technologies, programs like CCUS ITCs, ACCIP and carbon emission offsets generated under TIER drive Alberta forward along its Emissions Reduction and Energy Development Plan to achieve a carbon neutral economy by 2050.[55] 

 

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