Date: 20-May-09

Country: CANADA

Author: Scott Haggett

CALGARY, Alberta - The Canadian government announced details on Tuesday of the C$1 billion ($860 million) clean energy fund it promised in February, with the lion's share of the cash going to support the development of carbon capture and storage projects.

Natural Resources Minister Lisa Raitt said in a statement C$650 million has been earmarked to help pay for large-scale carbon capture and storage demonstration projects as the government looks to follow through on agreements made during U.S. President Barack Obama's February visit to Canada.

The remaining cash will be directed to paying for smaller-scale renewable and alternative energy projects and a C$150 million fund for researching clean energy technologies.

The Conservative Party government is looking to keep up with U.S. initiatives to stem climate change and to offset criticism of Canada's environmental record and of carbon-intensive oil production from the country's oil sands.

The fund was one of clean energy initiatives detailed by the government during Obama's visit to Ottawa in February.

The cash for the fund comes from the two-year, C$40 billion economic stimulus plan announced earlier this year in Canada's federal budget.

"This additional stimulus creates high-quality jobs for Canadians at a time when they are most needed," Raitt said in the statement.

Canadian governments have already moved to support carbon capture programs that would cut carbon-dioxide emissions from coal-fired power plants and oil sands operations.

Last year the federal government earmarked C$240 million to aid plans for a carbon capture program at a power plant in Saskatchewan while the Alberta government has a C$2 billion fund to support CCS programs in that province.

(Editing by Peter Galloway)

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