REGINA - Saskatchewan's power utility says its flagship, $1.4-billion carbon capture and storage project is proving the controversial technology works.
But critics of the Boundary Dam project argue that it doesn't effectively address environmental concerns because it justifies the burning of fossil fuels.
The retrofitted coal-fired power plant near Estevan garnered international attention when SaskPower launched it last fall. It is touted as the world's first commercial-scale operation of its kind.
SaskPower executive Mike Monea said the plant will produce affordable coal power for more than 100,000 homes and businesses for the next three decades.
"We are extremely proud of the project," he said Wednesday. "We don't have to abandon coal plants or lay off people.
"It looks very encouraging to see the performance, not only on the power side, but on the capture side of the whole plant."
The aim is to capture one million tonnes of carbon dioxide annually to be pumped underground — 90 per cent of the emissions the plant produces. The plant is on target to meet that goal, Monea said.
But a report released by the Canadian Centre for Policy Alternatives suggests the financial costs of the project are high and the environmental rewards remain unproven.
Co-author Mark Bigland-Pritchard said the project is substantially more expensive than if wind technology were used to produce the same amount of power.
"It's about the same cost as from solar (power), but the cost of solar is coming down, so that equality won't (last) long," he said. "And it's a lot more expensive than hydro even."
The report also argues that SaskPower could see up to $1 billion in operating losses over the next 20 years.
"It's an interesting engineering project, I don't deny that," Bigland-Pritchard said. "But it seems to me to be the wrong project for Saskatchewan at the moment."
Some of the carbon dioxide released at Boundary Dam is liquefied and sold to oil companies to help extract more crude from the ground. The utility has a 10-year contract with Cenovus Energy Inc. (TSX:CVE), a Calgary-based oil company, to buy the captured gas.
"It makes it difficult to see this as a carbon-saving measure," Bigland-Pritchard said. "It's enabling them to get more oil out of the ground."
The power station also captures sulphur dioxide, which can be converted to sulphuric acid and sold for industrial use. A byproduct of coal combustion called fly ash is captured and sold for use in concrete products.
The carbon dioxide that isn't used for oil recovery is stored permanently by injecting the gas more than three kilometres underground.
Bigland-Pritchard said the power plant represents a lost opportunity for the province.
"With renewables, we could go to a zero-carbon economy. With this we can't."
"The reality is we have to come off coal one way or another."
The plant has been heralded as one possible solution to fight climate change since 2008, when Prime Minister Stephen Harper visited the site and announced $240 million in federal funding.
SaskPower said it continues to tally the final cost. Monea said it could be between $150 million and $200 million over budget.
Bigland-Pritchard said there has been a lack of financial transparency.
"We don't know how much Cenovus is paying for the (carbon dioxide)," he said. "What we'd really like to see is a proper balance sheet."
Monea said he can't release the information because of a confidentiality agreement with Cenovus.