UPDATE: This story has been updated to correct an error in the last sentence.

FAIRBANKS — A federal defense bill includes more than $2 million to study carbon capture in Alaska, a project that would boost the prospects for a coal-to-liquids plant proposed for the Fairbanks area.

Rep. Don Young announced the project last week, when he and other House members approved last-minute changes to the annual federal military spending plan. President Barack Obama signed the bill Saturday.

As proposed, the carbon dioxide research project would study whether energy companies could use carbon storage, or “sequestration,” from a coal-to-liquid fuel plant in Fairbanks to improve oil production on the North Slope. Many North Slope wells inject liquid or gas into the ground to force more oil to the surface. The project would determine whether injecting carbon dioxide in place of current techniques would improve oil production while preventing carbon emissions.

The study also would indirectly review whether that enhanced oil production would address questions about emissions from a coal-to-liquids plant, which are seen as a potential hurdle.

Under the 2007 Energy Independence and Security Act, federal agencies can’t purchase alternative fuels with more greenhouse gas emissions than conventional fuel produces. Fuel from liquefied coal creates twice the carbon emissions of conventional jet fuel, according to the Environmental Protection Agency. This would prevent the Air Force from buying fuel from the plant unless the carbon dioxide could be reduced or contained.

Young spokeswoman Meredith Kenny said the representative sought $3 million for the research project, an amount that was reduced to $2.4 million in the congressional conference process.

For two years, energy watchers in Fairbanks have mulled the prospect of a facility to convert coal and biomass to liquid fuel. The Air Force has expressed interest in relying more on alternative fuels such as those produced through coal-to-liquid processes and is under a mandate to have 50 percent of its fuel come from greener, domestic sources by 2016.

Some believe enhanced oil recovery could extend the life of the North Slope’s major oil fields and draw several billion more barrels from reservoirs that have already supplied the trans-Alaska oil pipeline with 16 billion barrels.

The proposed multibillion-dollar plant would employ an updated version of century-old technology that turns natural gas or coal into non-oil fuels.

Young said the sequestration and enhanced oil recovery study would help advance the plant process. He said Alaska is at the forefront both of a national energy crisis and, with significant natural resources, potential solutions.

“This project is extremely important for bringing cheap fuel to our military bases and to Alaskans,” Young said in a statement. “I am a proud supporter of it and look forward to watching its progress.”

State and Fairbanks governments two years ago teamed for a $550,000 study of the proposed coal-to-liquids plant. Former Sen. Ted Stevens in 2008 included $10 million for further study in a federal bill. The Air Force says it is using that earmark to “evaluate and assess the feasibility of a developer constructing and operating a coal-to-liquid production facility” on Eielson Air Force Base.

Contact staff writer Christopher Eshleman at 459-7582.