The Department of Trade and Industry is expected next month to outline its Carbon Abatement Technology strategy, which will promote technology that captures emissions of carbon dioxide (CO2) from coal-fired power stations and stores them deep underground.

Funds to develop the technology on an industrial scale will be made available, but experts say that subsidies similar to those given to wind farms will be needed to make clean coal a reality.

The plan could save the country from a looming energy crisis. At least half of Britain’s coal-fired plants are due for closure by 2015 because they do not meet EU emission standards. The plants provide nearly 32 per cent of Britain’s electricity, rising to 45 per cent at times of peak demand.

Closure of the dirtiest power stations will coincide with the decommissioning of remaining nuclear power stations, which provide a fifth of UK electricity.

Ministers are expected to announce a small research grant to support a demonstration plant, but experts fear that the funds, thought to be on the scale of the £42 million given last year for marine and tidal energy research, will be insufficient to get the technology through industrial tests.

Iain Miller, chief operating officer of Mitsui Babcock, an engineering company that makes technology that can be fitted to existing power stations, believes research funds of £100 million to £120 million are needed to convert a power station producing 500 megawatts of electricity.

Last week Sir David King, the Government’s chief scientific adviser, said that $16 trillion (£8.6 trillion) was going to be spent on building new power stations worldwide over the next 25 years. He said that if the industrial world burnt all the coal and gas reserves without capturing the carbon produced, there would be massive climate change.

The carbon abatement strategy would see existing power stations fitted with chemical plants capable of stripping CO2 from their exhaust gases. The gas would then be compressed and pumped through pipes that would carry it to the oil and gasfields of the North Sea, where it would be pumped underground to fill voids left by the removal of oil and gas.

The process could pay for itself by pushing more oil out of “mature” fields, through raising the underground pressure.

Britain emits about 560 million tons of carbon dioxide a year, with about a third of it coming from power generation.

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