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Canada Infrastructure Bank is lending $277-million to developers of a Quebec biorefinery, which is being built to convert non-recyclable waste and cast-off wood into low-carbon fuels.

CIB, a Crown corporation, said the financing will support construction of Varennes Carbon Recycling, a $1.2-billion joint venture of Shell PLC SHEL-N, Suncor Energy Inc. SU-T, Proman Canada Inc. and the Quebec and federal governments. It is the first funding arrangement under a recently expanded mandate for CIB to include in its financing green technologies such as low-carbon fuels; carbon capture, utilization and storage; and hydrogen production.

The project is already under construction in the off-island Montreal suburb of Varennes. It will employ waste-to-methanol technology developed by Enerkem, the Canadian cleantech company. It is designed to convert more than 200,000 tonnes of waste annually, including wood waste, into biofuels and commonly used chemicals. The waste products are currently landfilled or burned.

The biorefinery will have a capacity of up to 130 million litres a year when it starts up in 2025, and the developers say it is expected to cut more than 170,000 tonnes of greenhouse gas emissions a year, which is 4.25 million tonnes over the project’s 25-year lifespan.

The facility will include one of the world’s largest plants for producing hydrogen using non-fossil-fuel sources: a 90-megawatt electrolyzer, which splits water into hydrogen and oxygen. The developer said last week it had selected Indiana-based Accelera, a unit of Cummins Inc. CMI-N, to supply the equipment.

The CIB loan is on top of $390-million in funding for the project from the Quebec government and $450-million from the private sector. There is also additional federal and provincial funding, CIB spokesman Ross Marowits said.

Ottawa founded CIB as a $35-billion corporation in 2017 to invest in large projects and encourage institutional investors, such as pension funds and private asset managers, to boost their investments in Canadian infrastructure. In 2020, it hired former Infrastructure Ontario head Ehren Cory as chief executive officer.

It has been criticized in the years since its inception. In May, the House of Commons transport committee issued a report that recommended the bank be abolished over concern among non-Liberal members related to its efficiency. It noted several witnesses expressed concern during committee hearings about CIB that projects were not flowing as quickly as expected.

However, the bank’s role was expanded in the 2022 federal budget “to invest in private-sector-led infrastructure projects that will accelerate Canada’s transition to a low-carbon economy.”

In the past year, it has invested in a host of projects, including $970-million for the country’s first small nuclear reactor in Ontario; $500-million to triple the number of electric-vehicle charging stations in Canada; and $800-million for a First Nations-owned hydro project in Yukon.

“The Canada Infrastructure Bank is pleased to have acted quickly on its expanded role to support transformational efforts to accelerate Canada’s transition to a low-carbon economy,” Mr. Cory said in a statement announcing the financing for the Varennes project.

“Converting waste and residual biomass into clean hydrogen is the CIB’s latest effort helping the country reach net zero by 2050 and represents its first investment in low-carbon fuels.”

The developers said the project will employ 500 people during construction and 100 when it is operational.