Tidewater Renewables enters into inaugural multiyear sale agreement for CFR credits
Updated: Sep 21, 2022
Tidewater Renewables Ltd. announced a multiyear agreement June 28 with an investment-grade company to sell federal Clean Fuel Regulation credits that it will receive through the production and sale of fuel produced at its renewable diesel and renewable hydrogen complex in Prince George, British Columbia, Canada, adding previously unrecognized value and an incremental revenue stream to the corporation.
As part of the transaction, Tidewater Renewables has agreed to sell a total of 45,000 CFR credits at CAD$95 (USD$74) per credit. This multiyear agreement, which extends to June 30, 2025, adds previously unrecognized value for CFR credits and Tidewater Renewables will receive total proceeds of more than CAD$4 million (USD$3.1 million) over the term of this agreement. The corporation’s current run-rate EBITDA estimates for the complex of CAD$90 million to CAD$100 million (USD$69.8 million to USD$77.6 million) exclude the impact of the outlined forward sale and any value for the ongoing sale of CFR credits once the program is implemented.
“This is Tidewater Renewables’ inaugural CFR credit sale, which we believe is the first of its kind in Canada,” said Joel MacLeod, executive chairman and CEO. “This credit sale is significant for Tidewater Renewables as it validates our previous thesis that CFR credits will represent an incremental revenue stream for our suite of clean-fuel projects. Furthermore, at similar CFR credit values, Tidewater Renewables’ [renewable diesel] complex has the potential of generating an incremental CAD$30 million (USD$23.3 million) of run-rate EBITDA assuming feedstock prices, diesel prices and BC LCFS credit prices remain constant.”
The corporation continues to work on other potential multiyear agreements to monetize further CFR credits that it will receive from operation of the complex, from its canola coprocessing facility, and from other projects.