Environment: Saskatchewan carbon capture project gets $240-million

Globe and Mail: SHAWN MCCARTHY - February 26, 2008

OTTAWA _ The federal government has committed $240-million for the construction of a clean-coal power plant in Saskatchewan, which would capture carbon dioxide and then permanently store the greenhouse gas underground.

The Saskatchewan project is the signature investment in the government's 2008 budget funding to reduce greenhouse gas emissions that are blamed for climate change.

Ottawa is also encouraging the auto industry to invest in emissions-reducing technology by providing $250-million over five years to support research and development, and maintain Canadian jobs in the sector.

And it will spend $66-million over the next two years to develop the regulatory framework that will underpin a carbon emissions trading market in Canada.

But the Harper government has clearly identified carbon capture and storage as a key plank in a climate change effort that opposition parties and environmentalists have criticized as too lax.

"Carbon capture and storage presents an opportunity for Canada to develop world-leading technology that can significantly reduce greenhouse gas emissions," the government said in its budget document.

SaskPower, the provincially owned utility, has for years been considering constructing such a clean-coal power plant close to the oil fields of southern Saskatchewan, where the captured CO2 can be used to enhance crude production.

Last summer, the utility announced it would proceed with several other projects to meet growing demand, but that the estimated construction costs for the clean-coal plant had escalated too rapidly for it to proceed. Since then, Saskatchewan has elected a new small-c conservative government that has improved relations with Ottawa after its battles with the previous NDP government.

In his budget, Finance Minister Jim Flaherty said the Saskatchewan will match the federal funding for the coal project, which would be a commercial scale demonstration project.

Mr. Flaherty also announced new tax incentives for the oil and power sectors in Alberta to build a carbon-capture-and-storage pipeline that could collect carbon dioxide at oil sands plants and power stations and deliver it to oilfields for enhanced recovery projects.

Environmentalist Aaron Freeman said the Flaherty budget contained some positive "green" measures, including a commitment to spend $500-million over two years on public transit and a clean-water initiative.

"But overall, we are not seeing in this budget that kind of priority that Canadians are placing on the environment," Mr. Freeman said. He criticized the climate change effort as "very, very modest."

He said the Harper government is providing subsidies to industry to capture and sequester carbon dioxide - money the companies themselves would spend if Ottawa imposed strict emissions limits.

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