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Carbon capture deal cancelled

EDMONTON - Another energy company has pulled the plug on a plan to capture and store carbon created by coal-fired power generation.

Swan Hills Synfuels and the Alberta government have announced they will discontinue a $285-million funding agreement that would have seen underground coal converted to gas and then burned to generate electricity.

The carbon dioxide would have been stripped out and sold to nearby oilfields to boost production.

CEO Martin Lambert says natural gas has become so cheap that it no longer makes sense to create more from coal.

Synfuels was one of four carbon capture and storage projects the provincial government was funding out of a $4-billion pot.

The projects have been referred to by government officials defending the province's environmental record.

TransAlta scrapped a $1.4-billion project last spring.

The two remaining projects — Enhance Energy's CO2 pipeline and Shell's Scotford upgrader — are proceeding.

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