Ottawa will spend $155.9 million to make Alberta's oil and energy industry more environmentally friendly, Prime Minister Stephen Harper announced Thursday.

Most of the money will be spent studying ways to capture carbon dioxide emitted from the province's oilsands and store it underground, instead of releasing the polluting gas into the atmosphere.

Prime Minister Stephen Harper announced funding Thursday for studying ways to capture carbon dioxide emitted from Alberta's oilsands.
(CBC)

A federal-provincial task force will be set up to study the technology, Harper said.

"Most exciting of all, if we can perfect this technology, we can use it not only to curb Canada's contribution to greenhouse gas production, but we could also export it around the world," Harper said, while making his announcement in Edmonton.

The money will also support a project in Edmonton designed to convert municipal waste into electricity. Efforts to design a coal-fired electricity plant that releases almost no emissions will also be funded.

Harper, flanked by Alberta Premier Ed Stelmach, reassured the oil industry that new technology will not harm business.

"All Canadians are looking for a balance between economic growth and environmental protection," Harper said. "Finding that balance is the fundamental challenge of our time."

Sierra Club criticizes funding

Some environmentalists were critical of Thursday's announcement. The Sierra Club said the government should be working to cut carbon dioxide emissions altogether, rather than encouraging a continued dependence on oil.

"Canadian and Albertan taxpayers should not be footing the bill for this industry to clean up its act," Lindsay Telfer, a Sierra Club director, said in a news release.

"If the government is serious about reducing emissions, it should eliminate all subsidies and develop a solid plan for putting absolute reduction targets on industry."

Harper's announcement came on the day the Alberta government introduced legislation requiring about 100 high-polluting companies to reduce their emissions output starting July 1.

Greenhouse gas emissions in Alberta have increased by 40 per cent since 1990, largely because of the oil industry.