The federal government says its review of the problems at IPAC-CO2 revealed "serious concerns" that will mean tougher scrutiny for future University of Regina projects.
Two months ago Western Economic Diversification launched a review of IPAC following revelations that the carbon capture project at the U of R was facing allegations of conflicts of interest and wasted money.
The International Performance Assessment Centre for the Geologic Storage of CO2 was established in 2008 to set international standards for the safe storage of carbon dioxide underground.
The federal government, through Western Economic Diversification, invested $4 million in the project in 2010.
It learned of the troubles through CBC News reports in February.
"Our review concluded there were serious concerns with the [U of R's] handling of this project," a federal government spokesperson told CBC News in an email. "In particular, lapses in transparency and competitiveness, that we were not made aware of until recently, were identified."
In a series of investigative features, CBC News reported that IPAC-CO2 was embroiled in allegations of conflicts of interest and concerns over wasted money and mismanagement.
For example, a high-performance computer that was paid for with federal money ended up in the hands of a private company, contrary to an agreement with the U of R.
Concerns about IPAC also prompted the NDP opposition to question the provincial government's involvement with, and oversight of, the project.
Ottawa's investigation of the identified concerns led it to impose new standards for dealing with U of R research projects.
"WD [Western Diversification] believes in respect for taxpayer dollars, and moving forward we will be applying a stricter level of scrutiny and monitoring to projects with the University of Regina to ensure value for money," the spokesperson noted.
In a written statement, the university gave a one-sentence response to questions about the federal government's move.
"The University of Regina has great respect for our long-standing relationship with Western Economic Diversification," the statement said, "and are pleased to co-operate fully as we move ahead."