By Nora Buli
OSLO (Reuters) -Norway's capital pledged on Tuesday to breathe new life into a long-delayed carbon capture project after the municipal authority joined a deal to buy Finnish utility Fortum's stake in one of the city's major heating providers.
Fortum said earlier it had agreed to sell its 50% stake in Fortum Oslo Varme for 10 billion Norwegian crowns ($1.1 billion) to Hafslund Eco, owned by the Oslo municipality, as well as to private equity firm HitecVision and Sweden's Infranode.
Fortum Oslo Varme, Norway's largest producer of district heating, uses surplus energy from a waste incineration plant to heat water, pumping it to homes and businesses via a network of insulated pipes.
Oslo has for years planned to develop technology for the waste plant as part of Norway's Longship carbon capture and storage (CCS) project, which aims to transport CO2 from onshore industry to a vast offshore underground deposit.
In 2017, the city said the Klemetsrud incinerator had shown promising results in capturing greenhouse gases from the fumes of burning rubbish, but plans to complete the project by 2022 faltered due to a lack of funds.
Norway's government has promised some 3 billion crowns in funding and Oslo and its business partners are prepared to pay up to 6 billion of an estimated cost of 9 billion, with a goal of completion in 2026, Governing Mayor Raymond Johansen said.
The waste incinerator emits around 400,000 tonnes of CO2 annually, corresponding to 14% of the city's overall emissions of greenhouse gases.
"We can't continue with that. If we want stop climate change we need to change the way we do things, and we need to act before it's too late," Johansen told a news conference.
Closing the sale of Fortum's stake depends on approvals from the Oslo city council as well as competition regulators, and is expected to take place during the second quarter of 2022, the companies said.
($1 = 8.7541 Norwegian crowns)