The Saskatchewan government is going ahead with a $1.24 billion overhaul of a coal-based power plant so the carbon dioxide it produces can be stored.
Construction on the Boundary Dam Integrated Carbon Capture and Storage Demonstration Project is to begin immediately, with operations to begin in 2014, the province announced on Tuesday.
SaskPower, the government-owned power company, is calling it the largest capital project in company's history.
The overhaul of an aging generating unit — No. 3 — at Boundary Dam Power Station near Estevan will reduce greenhouse gas emissions by approximately one million tonnes per year, the province says.
The plan is to use some of the captured CO2 for enhanced oil recovery. That involves injecting carbon dioxide into the ground to extract extra oil out of partially depleted reservoirs.
In addition to capturing CO2, the refurbished Boundary Dam plant will siphon off sulfur dioxide that will be used to manufacture sulfuric acid.
The federal government had previously contributed $240 million to develop the project. Much of that money has already been spent.
The lion's share of the spending will come from SaskPower. Government officials said the project is economically viable, noting that SaskPower had record profits last year and is in a good position to proceed with a project of this magnitude.
What the project doesn't have yet is a company that wants to buy the CO2 or the sulphur.
Rob Norris, the minister responsible for SaskPower, said the project will put Saskatchewan in the forefront of green energy production.
SaskPower officials also predicted the project will provide a major economic boost in the arm for the Estevan area in the southeast part of the province.
The new generating unit will have a capacity of 110 megawatts.
SaskPower get about half of its generated 3,500 megawatts from coal-burning plants, with the Boundary Dam plant the largest.
Burning coal is a major source of carbon dioxide, a greenhouse gas that scientists say is contributing to global warming and climate change.