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Canada Foundation for Sustainable Development Technology – Fondation du Canada pour l’appui technologique au développement durable (the “Foundation”) is a corporation continued under the Canada Foundation for Sustainable Development Technology Act, (S.C.2001) effective on March 22, 2002.

The Foundation is not an agent of Her Majesty, but is accountable to Parliament through the Ministry of Natural Resources Canada. Environment Canada and Industry Canada are the other key departments involved in the work of the Foundation.

The Foundation’s mandate, governance, operations, performance requirements, accountability and relationship to the Government of Canada are defined in its governing statute and in funding agreements that have been executed by the Foundation and the Ministers of both Natural Resources Canada and Environment Canada. In this way, the Foundation operates as a fully accountable instrument of the Government of Canada to help provide timely development and demonstration of innovative technology solutions to the nationally important issues of climate change, clean air and water and soil quality.

The Foundation manages two funds: the SD Tech Fund and the NextGen Biofuels Fund, which are further described below.

SD Tech Fund

To date the Foundation has received $550 million, and a $40 million conditional grant, from the Government of Canada to provide financial support to projects that develop and demonstrate new technologies that have the potential to advance sustainable development, including technologies to address climate change, clean air and water and soil quality issues. This support is provided to eligible recipients that have established partnerships which are comprised of a private sector commercial corporation and one or more of : a private sector commercial corporation, a university or college, a private sector research institute, a not-for-profit corporation, or a federal or provincial Crown corporation (or subsidiary) whose role is the provision of resources and/or facilities to the consortium as a subcontractor.

The Foundation will endeavour to ensure that there are funds available to allocate to new eligible projects at least up to December 31, 2012. With the exception of a reasonable amount reserved for related project monitoring and evaluation, and for wind-up costs, the Foundation will also endeavour to manage and disburse the funds in total by June 30, 2017.

NextGen Biofuels Fund

During the year ended December 31, 2007, the Foundation entered into a funding agreement with the Government of Canada which provided for a conditional grant of $500 million to be paid over the period to March 31, 2015, to create the NextGen Biofuels Fund (“NGBF”). The NGBF will provide financial support towards the establishment of first-of-kind facilities that demonstrate production pathways for next-generation renewable fuels at large demonstration scale. This support is provided to eligible recipients that are to include for-profit corporations, partnerships, limited partnerships or business trusts with legal capacity in Canada and that have access to expertise in next-generation renewable fuels production pathways. Agreements for financial support to eligible recipients include provisions for repayability from free cash flow of the funded project.

The Foundation will disburse up to March 31, 2017 (the “disbursement period”) its share of eligible project costs incurred or to be incurred by eligible recipients. With the exception of a reasonable amount reserved for related project monitoring and evaluation, collection of repayments and for wind-up costs, the Foundation shall return any portion of the NGBF at the earlier of the end of the funding agreement on September 30, 2027, and such earlier time or times subsequent to the end of the disbursement period as the Government of Canada may determine.

Notes to Financial Statements 27

Notes to Financial Statements

Years ended December 31, 2012 and 2011 (Amounts in Thousands of Dollars unless otherwise noted)

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