Calgary, Alberta-based power generation company TransAlta (NYSE: TAC) said today that it signed an agreement with French power group Alstom to develop a large scale carbon capture and storage facility in Alberta.

Under the agreement, a pilot version of Alstom's chilled ammonia process will be installed at a TransAlta coal fired generating station west of Edmonton.

"Our project with TransAlta is a key part of our objectives for the early deployment of the technology," said Philippe Joubert, president of Alstom Power Systems.

"There will be no CCS without storage, and we are aware of the favorable geological conditions in Alberta, Canada. That is why we have set this region as a priority for our development efforts."

TransAlta said the first phase of the project, aimed at advancing and improving understanding of CO2 capture and storage technology, would begin this year with engineering, stakeholder relations and regulatory work expected to cost $12 million.

"We think it is important to advance the science of CCS if Canada, and the world, are to effectively reduce CO2 emissions," said Steve Snyder, president and CEO of TransAlta.

"Over the long term, we believe CCS can be a source of competitive advantage for TransAlta and for Canada."

TransAlta said subsequent phases of the project, subject to partner and government funding, would continue over the next five years with testing scheduled to start in 2012.