Durum Capital Inc. Launches Unique New Carbon Fund, Durum Carbon LP

Durum Carbon LP offers exposure to rapidly growing carbon credit asset class

CALGARY, AB, March 17, 2022 /CNW/ - Durum Capital Inc. today announced the launch of Durum Carbon LP, an investment vehicle created to provide financial exposure to global climate change policies while capturing the demands of environmentally conscious investors today. Canada's transition to a low-carbon economy and tightening environmental regulations have led to the creation of a unique market opportunity for the purchase and sale of carbon credits in Canada. Durum Carbon LP ultimately seeks to participate in this market through the strategic acquisition and management of a carbon credit portfolio.

What are carbon credits and how do they work?

Climate change has become an increasingly important issue for many investors around the globe.  Many governments around the world have implemented policies to incentivize heavy emitters to reduce greenhouse gas ("GHG") output in an effort to slow the climate change trend.

Putting a price on carbon is widely recognized as one of the most efficient means to reduce GHG emissions while also driving innovation¹. A carbon credit system is a market-based mechanism that incentivizes organizations to reduce overall emissions through the buying and selling of "carbon credits."

Carbon credits are tradable certificates that allow the holder to emit one tonne of carbon dioxide equivalent ("CO₂e") for each carbon credit utilized. For a visual comparison, one carbon credit would equal the carbon dioxide output of approximately 500 fire extinguishers combined. The cost of these emissions is equal to the cost of carbon credits in the market. As environmental regulations continue to tighten, it is expected that the value of carbon credits will increase, further raising the cost of GHG emissions.

Alberta's Compliance Carbon Market

A carbon credit is created in one of two ways:

1. innovative companies that reduce or remove GHG from the atmosphere can generate carbon credits equal to the amount of CO₂e reduced or removed; or
2. regulated facilities that emit less GHG than they are permitted by government authorities are granted carbon credits. The amount of carbon credits they are granted is equal to the net amount of the emissions shortfall.

These carbon credits can then be sold to and utilized by emitters in the marketplace that exceed their allowable emissions threshold. The purchase of carbon credits will allow the emitter to achieve compliance with environmental regulations and avoid paying a penalty in the form of the TIER² Fund Credit price or carbon price. Carbon credits trade over the counter and are typically priced at a discount to the prevailing government mandated carbon price, currently set at $50/tCO₂e³.

Durum Carbon LP Strategy

The Government of Canada has proposed an increase in the carbon price of $15/tCO₂e each year until 2030. From the current level of $50/tCO₂e, this equates to an increase of 240%⁴.

In a market known for its opaqueness and complexity, Durum Carbon LP's strategy is a novelty in that it is both transparent and simple. Durum Carbon LP will purchase and hold over-the-counter carbon credits, and then sell them at a premium as the carbon price appreciates and when return targets are met. Management will actively monitor international compliance and voluntary markets to assess arbitrage opportunities and/or rebalance the carbon credit portfolio as global carbon markets mature. Through Durum Carbon LP, investors gain unique exposure to the rapidly growing asset class of carbon credits.

The importance of strong governance in an emerging asset class

Climate change and associated carbon markets have garnered the interests of some of the most influential organizations in the world: governments, insurance agencies, pension plans and even central banks. With that type of attention, there will inevitably be a variety of different carbon-related investment opportunities on the horizon.

Management believes that Durum Carbon LP's strong governance, robust credit strategy, extensive network and years of energy trading experience provides a competitive advantage in today's thinly traded carbon market.

About Durum Carbon LP

Durum Carbon LP is an investment vehicle created to provide investors with unique exposure to the rapidly growing asset class of carbon credits. Canada's transition to a low-carbon economy and tightening environmental regulations have led to the creation of a unique market opportunity for the purchase and sale of carbon credits in Canada. Durum Carbon LP ultimately seeks to participate in this market through the strategic acquisition and management of a carbon credit portfolio. Durum Carbon LP is a listed entity on the Alberta Carbon Registry and currently purchases carbon credits under Alberta's Technology Innovation and Emissions Reductions (TIER) regulatory framework.

About Durum Capital Inc.

Durum Capital Inc. is an asset manager focused on investments that require unique skills to uncover true value. Durum offers expertise in financing, governance, and operational efficiencies, ultimately creating alternatives to bring transparency to opaque situations in private markets.

Sources:

1. Environment and Climate Change Canada. A Healthy Environment And A Healthy Economy. (2021)
2. Technology and Innovation Emissions Reduction Regulation
3. Alberta Environment and Parks. Emissions Management and Climate Resilience Act. (2021)
4. Government of Canada. Update to the Pan-Canadian Approach to Carbon Pollution Pricing 2023-2030. (2021)

Disclaimer

©2022 Durum Carbon LP.  Available to Canadian accredited investors only and subject to minimum subscription and maximum offering limits.  Subject in all respects to Durum Carbon LP's formal legal, policy and subscription documents (the "formal documents"). This publication is not an invitation or offer to invest, or intended as an offering memorandum, offering document, or investment advice of any kind.  It has not been reviewed or otherwise assessed by any securities regulator.  No person has been authorized to give any information or to make any representation not contained in the formal documents. The contemplated investment opportunity is speculative and involves a high degree of risk. There is a risk that any investment made will be lost entirely or in part. Only prospective investors who do not require immediate liquidity of their investment and who can afford the loss of their entire investment should consider this investment. This publication contains forward-looking statements or information under applicable securities laws.  Since forward-looking statements and information address future events and conditions, by its very nature it involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of risks. The forward-looking statements and information contained in this publication are as at the date of this publication and Durum Carbon LP does not undertake any obligation to update publicly or to revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.  In addition, this document may contain forward-looking and other information attributed to third party industry sources, Durum Carbon LP has not verified and in no event shall it be liable for the accuracy, completeness or timeliness of such information.  Readers are cautioned that the foregoing list of factors is not exhaustive. 

SOURCE Durum Capital Inc.

For additional information on Durum Carbon LP, carbon credits, and this rapidly growing asset class, please contact: President and Managing Director, Durum Capital Inc., Malinda Kellett, [email protected]; Vice President, Durum Capital Inc., Spencer Gordon, [email protected]; Investor Relations, Durum Capital Inc., [email protected]