CDPQ follows peers by allocating hundreds of millions to Sweden’s Northvolt

The Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) told Net Zero Investor it is following a range of pension funds by joining Sweden's Northvolt as an investor.

The C$424 billion Québec-based CDPQ will allocate C$200 million, around $150 million to the integrated battery platform, Kim Thomassin, executive vice-president and head of the Québec office at CDPQ, confirmed to this publication.

Financing will take place in the form of convertible debt in the parent company, which is located just outside Stockholm, and should contribute to the realisation of the Northvolt Six project, which was announced recently, she stressed.

CDPQ joins a number of other Canadian pension funds that have already invested in the electric-vehicle battery maker, including Investment Management Corporation of Ontario, Canada Pension Plan Investment Board, and OMERS.

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Northvolt operates Europe’s first gigafactory in Sweden and is currently developing other projects to expand in Europe. Gigafactories specialise in the production of components and products for electrification and decarbonisation technologies. 

In addition, it is close to launching a $7-billion manufacturing facility outside Montreal that will have capacity to produce up to one million electric vehicle batteries per year, the company said recently.

Groundwork for the construction of the Northvolt Six facility, a battery factory in Saint-Basile-le-Grand and McMasterville, just outside of Montréal, is expected to start before the end of this year.

When fully built, the factory should have an annual production capacity of up to 60 GWh, with facilities to manufacture cathode active material, cells and recycled materials, effectively closing the battery loop on site.

“The battery value chain is a high-interest sector for CDPQ, and with a favourable impact on the energy transition, so we believe it will experience strong growth over the next decade, which we expect will benefit our depositors,” Thomassin explained.

“This sector is promising for Québec’s economic development and we want to contribute to that," she added.

Clean energy push

CDPQ is increasingly allocating funds to renewables and other clean energy firms. 

Bertrand Millot, head of sustainable investment at the pension fund, recently discussed the retirement scheme's investment priorities with Net Zero Investor.

"We are investigating other potential sectors such as carbon capture, green cement and steel to eventually be in a position to invest in them, but only once they are sufficiently mature to meet our risk-return criteria."

He said that, iIn addition, CDPQ is playing a key role in pushing portfolio companies to reduce their emissions. 

"We own large stakes in power companies that have, after we invested, been certified as aligned with net zero ambition. They were able to do so by replacing their fossil fuelled generators with renewables," Millot said.

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