BROOKLYN, N.S. -- The former Bowater Mersey paper mill in southwestern Nova Scotia will be converted into a research, development and demonstration facility.

Premier Darrell Dexter made the announcement today in Brooklyn, where he said his government was teaming up with private utility company Emera (TSX:EMA) and CelluFuel, a renewable energy company, to launch the site.

The establishment of the centre comes after the government made a deal this week to acquire 220,000 hectares of land from Resolute Forest Products Ltd., the mill's former owner, while taking on $117.7 million in debt.

It also follows a recommendation made by a panel that examined how to revitalize the region's economy after the paper mill shut down earlier this year, laying off 320 workers.

Emera has signed on as the centre's first tenant, promising to spend at least $1 million over the next five years.

Innovacorp, a provincial Crown agency that focuses on venture capital investment, will spend up to $500,000 to cover start-up costs.

The provincial government is also giving $500,000 to CelluFuel which is intended to help the company turn wood biomass into renewable diesel fuel.

The government says the money matches an investment from the private sector.