5 Questions: Svante CEO Claude Letourneau on government support, competition in the carbon management market

Burnaby-based Svante is one of the world’s leading carbon management firms—a point accentuated by the fact it recently received up to $137 million from the Canada Growth Fund to ramp up the development and construction of its commercial carbon capture and removal projects in Canada and the United States.

We talked to Svante CEO Claude Letourneau about that and where the company is at in this stage of its growth.

Congrats on the funding announcement. How big is that for your company right now?

Well, over the years we’ve raised about US$500 million. The last round was about US$312 million almost three years ago. The task was to use these funds to build a factory, make filters and scale. What we realized over the last 12 months is that there’s a bit of a headwind in the CCS (carbon capture and storage) market. We realized that if we were to be a bit more active in participating financially with our customers, being a co-project developer with them, it would accelerate some of these projects and help the decision to invest. That money from the Canada Growth Fund is structured for us to be able to invest and participate in pre-capital projects.

Our core business model is to be an OEM (original equipment manager) and technology provider, but we always felt we needed to help our customers make the decisions and get the tax credits and everything like that. It’s time for us to be more active. So we went to the Canada Growth Fund and explained that to them.

Earlier this year, you expressed some disappointment over there not being enough financial support for Canadian carbon capture solution providers. Is this a squeaky wheel gets the grease situation?

No, there’s no relationship between the two. So far, we’ve been told that the filter manufacturing plant we’re building in Vancouver doesn’t qualify for a grant. That’s what my grinding was about. This [investment] is about selling the filters out of the factory we’re building on our own dime.

And how are things going with the factory? Are you still a bit unhappy that you’re not getting that support?

Well, we can’t wait for government to decide when to support us on these things, so we built this facility and are spending US$145 million on [a Burnaby facility] as we speak. We’re almost three quarters of the way done. We’ll do a grand opening in Q2 of next year so moving forward with this.

What’s the competition like in the industry right now as more and more firms develop technology and enter it?

I think people are starting now to understand the segmentation of the market. Different technology applies to the different customer value propositions that work for certain technology. There are three generic technologies to do carbon capture. The incumbent one is liquid solvent. Very large companies like Shell use it. Right now when you hear announcements for these projects, they’re for large gas power plants. The second technology, which we use, is solid sorbent. And the last one is more cryogenic technology, where there’s only a few players.

In solid sorbent, we excel from a performance point of view. What we’re focusing on and what we call the affordable industry are things like pulp and paper and making power from biomass burning. Steel and cement are also a part of that, because in Europe there is quite a bit of regulation in the carbon intensity of those industries so there’s a mechanism to monetize that CO2.

You split your time between Montreal and here, what’s that been like?

I have a place here in Vancouver, but I’ve been commuting between the two for eight years. For the first five years, 70 percent of my time was here. Now that I have a very strong team in Vancouver running the show, my job is to be out there in the world, to promote CCS and work on partnerships. I don’t have to be here as often.