Shell will go ahead with the first carbon capture and storage (CCS) project for an oil sands operation in Canada, the company announced.

The Quest project will be built on behalf of the Athabasca Oil Sands Project joint venture owners (Shell, Chevron, and Marathon Oil) with support from the governments of Canada and Alberta.

CCS is critical to meeting the huge projected increase in global energy demand while reducing carbon dioxide (CO2) emissions, said Peter Voser, CEO of Royal Dutch Shell plc. “If you want to achieve climate change goals, CCS has to be part of the solution. We are helping to advance CCS technology on a number of fronts around the world, but Quest will be our flagship project.”

Alberta’s oil sands are a secure, reliable source of energy and an economic engine which drives employment, trainin,  and business development across Canada and beyond. “We will need all sources of energy to meet world demand in the coming decades,” Voser said. “Lower CO2 energy sources will grow, but even by 2050 at least 65% of our energy will still come from fossil fuels, so CCS will be important to manage climate impacts.”

The Athabasca Oil Sands project produces bitumen, which is piped to Shell’s Scotford Upgrader near Edmonton, Alberta. From late 2015, Quest will capture and store deep underground more than one million tons a year of CO2 produced in bitumen processing. Quest will reduce direct emissions from the Scotford Upgrader by up to 35%, the equivalent of taking 175,000 North American cars off the road annually.

Both the Canadian federal and Albertan provincial governments have identified CCS as an important technology in their strategies to reduce CO2 emissions. The Alberta government will invest $745 million in Quest from a $2 billion fund to support CCS, while thegGovernment of Canada will invest $120 million through its Clean Energy Fund.

The International Energy Agency (IEA) calls CCS “a crucial part of worldwide efforts to limit global warming” and estimates that it could deliver about one-fifth of necessary worldwide reductions in greenhouse gases by 2050. Shell also is working with governments and experts to help the development of CCS in other countries, including projects in Norway and Australia.

Quest is the world’s first commercial-scale CCS project to tackle carbon emissions in the oil sands, and the first CCS project in which Shell will hold majority ownership and act as designer, builder and operator. It will also form the core of Shell’s CCS research program and help develop Shell’s CO2 capture technology.

Shell has received the necessary federal and provincial regulatory approvals for Quest. Construction has begun and will employ an average of about 400 skilled trades workers over roughly 30 months, peaking at about 700.