Carbon Contract for Difference

Plain meaning

A contract intended to reduce uncertainty about future carbon-price values for eligible low-carbon or emissions-reduction projects.

Also called

Key points

• A carbon contract for difference can provide price certainty by comparing an agreed contract price with a market or policy-linked carbon price.
• The exact payment mechanics depend on the contract terms.
• The Canada Growth Fund has been described as a principal federal entity for issuing carbon contracts for difference.
• These contracts are financing tools, not ordinary tax credits.

Why it comes up

Carbon contracts can affect whether clean-energy, carbon-capture, or industrial projects are financeable.