It has been condemned as one of the main causes of global warming but is coal about to enjoy an extraordinary rebirth as the fuel of the future?

The first power plant in the world that will take the toxic emissions from coal and bury them deep in the ground opens today, carrying with it the hopes of scientists and environmentalists around the world.

If the power station in Spremberg, eastern Germany, is able to produce affordable electricity without polluting the atmosphere, it could mark the start of a new era for a fossil fuel whose days appeared numbered.

Carbon capture and storage (CCS) technology is designed to separate carbon dioxide from other chemicals during the process of generating electricity and siphon it off to be buried safely in disused oil or gas fields, where it can be stored indefinitely. The construction of the new plant by Vattenfall, the Swedish power company, was welcomed by engineers and environmentalists but raised fears that British attempts to develop the technology, which is expected to cut CO2 emissions by up to 90 per cent, may be falling behind. A competition has been launched by the British Government to encourage the construction of a demonstration coal-fired plant with a capacity of at least 300MW — ten times the size of the German pilot — by 2014. It must be capable of being fitted, or “retro-fitted”, to existing power plants.

However, a decision on the recipient of the government development money is still a year away and critics believe that Britain's chance to dominate the sector is disappearing.

CCS has the potential not only to be a vital tool in controlling global warming but to win influence and numerous lucrative contracts around the world retro-fitting the technology.

A spokeswoman for the Department for Business, Enterprise and Regulatory Reform insisted that Britain remained “in the vanguard” of attempts to get the technology started. She said: “The UK has an ambitious approach to demonstrating CCS and we are among only a few countries in the world that have made a firm commitment to support commercial-scale demonstration projects. We remain on course for our project to be operational by 2014.”

The power company E.ON has been researching oxyfuel CCS, the system used in Germany, at its test facility in Nottinghamshire for 18 months but concedes that it has fallen behind Vattenfall. “They are ahead of the UK,” Emily Highmore, of E.ON, said.

She added that much of the research by the two organisations was complementary. “What we are hoping to do as a group is develop a pilot to be up and running by 2010. Everybody is working on this to the same end — desperately seeking the holy grail of making coal truly viable.”

Groups such as Friends of the Earth remain frustrated at lack of progress in Britain and accuse ministers of failing to champion CCS with sufficient zeal. Robin Webster, of the green pressure group, welcomed the German pilot: “We welcome it as a genuine attempt to demonstrate that CCS will work. It's small but this kind of thing is really needed. Our concern is that the UK is dragging its heels.”

Adding CCS technology to power plants is widely agreed to be the only realistic hope of making the necessary inroads into carbon dioxide emissions without resorting to the politically unacceptable option of turning the lights out. Fossil fuels are the biggest source of carbon dioxide emissions yet 80 per cent of the world's energy depends on them. The International Energy Authority calculates that CCS could account for almost a third of the CO2 reductions needed by 2050.

The official opening takes place today but the pilot plant has been operating for more than a week. It captures about ten tonnes of CO2 each hour for storage in an old gasfield.

CASE STUDY

Every pensioner in Spremberg knows which way the wind blows. The locals twitch their noses and glance at the sky, for this place, deep in brown-coal territory, was known as the Stinky Town of communist East Germany (Roger Boyes writes).

Now Stink-Stadt is about to host the world's most advanced attempt to clean up coal. “It's just a pilot project but we see this as a very positive development,” says Alexander Adam, of Spremberg town hall. “I remember how the smell from the power station and factories would engulf the town, and the dust settled on everything.”

For the East Germans, exploiting brown coal, or lignite, reduced dependence on Soviet energy supplies. The coal was strip-mined, exposing lunar craters across the landscape, and a model socialist township was built in Hoyerswerda for some of the 40,000 workers needed for the power complex.

About 11 per cent of East German electricity was produced here, three quarters of the urban gas supply and most of the brown-coal briquettes. The workers, choking on coal dust, got two free bottles of brandy a month.

“They called the booze ‘collier's death'. Everybody knew that their health wouldn't hold out,” says Waltraud Eberling, who still lives in the barrack-like Hoyerswerda housing estates thrown together in the early 1960s. “When the wind shifted our way, the washing on the line would be brown within minutes.”

The coke furnace — which along with the gas compression unit was the source of the stench - and a communist-era power plant were demolished after German reunification, and in the 1990s a cleaner power station was built by the Swedish group Vattenfall. It, too, belches smoke but only the aroma of percolating coffee wafts around Spremberg's sprucely painted and beshrubbed market square.

From today, after a gala opening with political bigwigs, Stinky Town could be doing its bit to save the global climate. The pilot plant, with its shiny grey oxyfuel boiler towers, is to be launched with all the pomp of an ocean liner slipping out of dry dock.

“This carbon-capture idea is a big step in the right direction,” says Alexander Rosstäuscher, a journalist on the local Lausitzer Rundschau. “I just have some reservations about its storage underground, about what it could do to the soil.” Whether carbon capture carries long-term risks because of leakage bothers some German environmentalists.

The Dudelsack (“bagpipes”) pub is holding an eat-as-much-as- you-can paella evening in honour of the clean coal plant. “It's bound to bring jobs, that what matters,” said Anna, a teenager sipping a cocktail. Living beside a power plant was no big deal for the locals, she added, “but if it makes us famous for saving the world, that would be cool”.

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