A multi-million dollar waste-to-energy project in Chatham-Kent (CK) is moving forward.
By a 14-0 vote on Monday night, council approved establishing a Municipal Services Corporation as well as beginning the loan process to oversee the proposed Renewable Natural Gas Energy from Waste facility and enter into a $25 million loan agreement between the municipality and the new corporation, if council eventually decides to invest in the project.
During the meeting, Mayor Darrin Canniff said this will be great for CK residents.
"Yes, we are going to borrow money to do it, but there are significant rewards," said Canniff.
The mayor explained that the money will be recovered through gas sales, and the extra money will be used to offset property taxes.
According to staff, Infrastructure Ontario will only lend funds directly to the municipality, which would then lend the funds to the new corporation for the project.
"The municipality could not borrow the entire required debt amount from Infrastructure Ontario. The project team has made the decision to recommend borrowing $25M from Infrastructure Ontario for a term of 15 or 20 years, with the rest of the debt being secured from private commercial sources," said Administration.
The waste-to-energy project is a partnership between the municipality and Greenfield Global, proposing an anaerobic digestion facility to convert industrial, commercial, and institutional organic waste into Renewable Natural Gas to divert material from landfill and produce a clean energy source.
The proposed facility in CK has been in the works for five years and is expected to serve several municipalities, staff said.
It's also expected to deliver significant environmental and operational benefits, and aligns with Council’s climate and waste management goals.
Administration noted the project has now secured $45 million in federal Clean Fuels Fund support structures as an interest-free loan repayable over 10 years once profitable.
It has also secured approximately $5 million in Federal Economic Development Agency funding, totalling approximately $60 million in funding secured from upper levels of government.
The current estimated cost of the plant is approximately $160 million.
The municipality has a 40 per cent share of the $40 million in equity ($16 million) and is responsible for 40 per cent of the anticipated $60-$70 million in debt financing required after federal funding is subtracted, depending on final capital cost estimates.
"Costs that escalated during 2022 and 2023 have now stabilized, and the engineering work has been ramped up to be ready to proceed to tender this summer," noted staff. "Costs are aligning with expectations of a successful project. Complete financial projections, along with a review from a third-party auditor, will accompany the final go/no go decision report in April. This report will include the necessary information to satisfy Council and the Greenfield Global Board or Directors on whether it is financially advantageous to approve the joint venture."
Final approval for the project is expected on April 27.
If approved, the anaerobic digester will be built on Bloomfield Road in Chatham across from Greenfield Global.
