Oct 27 (Reuters) - Canada's federal financing agency

Canada Growth Fund (CGF) has proposed funding support for a

multibillion-dollar carbon-capture investment by Pathways

Alliance, representing Canada's biggest oil sands producers, The

Globe and Mail reported.

The CGF's proposal is expected to kick off further

negotiations, but a final deal is likely months away, as both

sides remain apart on key terms, according to the report on

Sunday, citing sources familiar with the matter.

Carbon capture is a process through which carbon dioxide

generated from industrial activity is stored underground. The

report didn't mention any financial details about the

investment.

Pathways Alliance and Canada Growth Fund didn't immediately

respond to Reuters' requests for comment.

Pathways Alliance has been proposing a C$16 billion ($11.51

billion) investment in a carbon capture and storage (CCS)

project to cut carbon emissions from the oil sands. The plan,

however, has faced criticism from environmentalists for slow

progress and seeking more government financial support.

Pathways Alliance is made up of Canadian Natural

Resources ( CNQ ), Cenovus, ConocoPhillips Canada,

Imperial, MEG Energy ( MEGEF ) and Suncor Energy ( SU )

representing about 95% of Canada' oil sands production,

according to its website.

CGF, meanwhile, is a $15 billion public investment vehicle

that helps attract private capital to build Canada's clean

economy by using investment instruments that absorb certain

risks, in order to encourage private investment in low-carbon

projects, technologies, businesses, and supply chains, according

to its website.

Earlier this year, Canadian oil producer Strathcona

Resources ( STHRF ) partnered with CGF to build carbon capture

and sequestration infrastructure in Saskatchewan and Alberta

provinces.

($1 = 1.3895 Canadian dollars)