Clean coal test traps 95 percent carbon: Norway firm

A limitation of Sargas' technology is that the system works under pressure and only a handful of coal-fired power plants so far use the so-called Pressurized Fluidized Bed Combustion technology -- in Sweden, Japan and Germany.

That means it can be used in new plants, including any burning natural gas, but cannot be easily retro-fitted at plants where exhaust gases come out at atmospheric pressure.

"It's not a big technology for existing plants but for future plants it could be interesting ... Theoretically you don't need so much energy," said Eva-Katrin Lindman, head of research and development at Fortum Varme.

Among other projects, WE Energy and Alstom (ALSO.PA: Quote, Profile, Research) Power Inc plan to start a test carbon capture facility at the Pleasant Prairie coal-fired plant in Wisconsin by the end of the year, using a system using chilled ammonia.

Sargas is working with aluminum producers Alcan (AL.TO: Quote, Profile, Research) and Norsk Hydro (NHY.OL: Quote, Profile, Research), French metals producer Eramet (ERMT.PA: Quote, Profile, Research) and Norwegian group Tinfos on plans to build a coal-fired power plant to supply metals smelters in Norway.

If they win approval as hoped next year, the 400 megawatt (MW) plant could be up and running with full carbon capture at Husnes on Norway's west coast in 2012, Fleischer said. Sargas is in also in talks with other countries.

Coal is the world's number two source of energy behind oil, accounting for about a quarter of all primary demand.