You can't escape coal in Stainforth. It's embedded in the houses, the streets, the pubs, the dilapidated petrol station and the row of abandoned shops that once drew crowds to the high street. More obviously, it's in the pair of giant slag heaps that teeter ominously over the north side of town and the crumbling remains of Thorpe Marsh power station in nearby Barnby Dun. Then there's Hatfield Colliery, which stands in the middle of Stainforth itself as a reminder of the town's boom years.

But more than anything coal is embedded in the people. Live in Stainforth and you can expect to die three years earlier than the English average. You're also far more likely to develop cancer, suffer a stroke and grow up in a household with no wage earner. As far as education, skills and training go, Stainforth is the worst performer in the Doncaster region.

"Stainforth has never recovered from the strike in 1984-85," says Mayor Pat Pilkington. "People were off work for a year and a lot of families were torn to pieces. It took a lot out of people emotionally and psychologically. Some mining communities have recovered. No matter what we've tried there's been nothing to take the place of coal."

Yet remarkably, Stainforth may be about to make a comeback. In its recent energy review the Government stressed the need for a diverse, resilient and flexible power system based on a mix of fuel types. They also concluded that coal-fired power stations will provide around a third of the UK's electricity for the foreseeable future - on the condition they become cleaner.

That is what they are hoping to achieve in Stainforth, by reopening Hatfield Colliery and building a clean coal-fuelled power station beside it. "It is the first time that a vertically shafted mine has been reopened," says Richard Budge, CEO of Power-fuel, which runs Hatfield. "We've got 150 people working to reopen the mine by developing seam panels and putting in roads. Production will start by May 2007 and by November 2007 we expect to be producing 2.5 million tons of coal a year."

To begin with the mine will take coal from the High Hazel seam, but Budge plans to dig several new coal faces along the Barnsley seam and extract coal all the way to the coast 20 miles away. This will give the South Yorkshire pit reserves of around 27 million tons - enough for 15 years. "In 1996 people said there wasn't a future for coal," adds Budge. "But it's always been the cheapest, safest and most reliable form of energy. The only problem is it's also the dirtiest. The solution is simple: it just needs cleaning up."

To do this Powerfuel plans to construct a 430-megawatt power plant using integrated gasification combined cycle technology. This removes the undesirable elements in coal before it's burnt by oxidising it in a gasifier, transforming the energy stored within the coal into a combustible gas. What remains - chemicals such as sulphur and ammonia - are recovered and can be sold on to pharmaceutical companies and other industries.

At the same time Powerfuel wants to harness carbon capture and storage technology, which stops carbon dioxide from entering the atmosphere by "capping" the power station's chimneys. Instead, the harmful gas will be pumped into the underground oil and gas fields of the North Sea. "This will help to repressurise the fields and enable the oil companies to get another 10 per cent of the total reserves out of the ground," explains Budge. Powerfuel's main stumbling block is that this combination of technology has never been tried before. While it's possible to pump carbon dioxide from Hatfield to the Hum-ber, the Government has yet to agree to a pipeline.

Despite this, the scheme has already been given Section 36 consent, which means a power station of greater than 50 megawatts can be developed on the site. Powerfuel's project has also collected an unlikely array of supporters, stretching from Russian coal giant Kuzbassrazrezugol, which paid pounds 912m for a 51 per cent stake in the company, to Friends of the Earth.

Nick Rowe, climate and energy campaigner for FoE, explains: "Britain is in a unique position. We have a small window of opportunity to use this technology to continue the output of the North Sea. Given the drastic scale of climate change it is something we have to consider."

The final decision on whether the full Hatfield plans become a reality lies with the Treasury. Given that the UK will lose a third of its current coal-fuelled capacity (eight gigawatts) by 2015 as a result of EU environmental legislation, the plan needs to be considered carefully, particularly as the UK is likely to need 25 gigawatts of new electricity generation capacity by 2025.

"Both the UK and Norway see great opportunities for carbon storage in the North Sea," explains the Energy minister Malcolm Wicks. "There is a big concern for public and environmental safety so we have to select the site carefully."

Yet while the Hatfield plans may have major implications for the coal-driven powerhouses of India and China, the people of Stainforth are more concerned with their own corner of the world. Along with reopening the Hatfield pit and creating a massive power plant, Power- fuel intends to build a business park and shift millions of tons of earth to screen the complex. So once again coal is destined to radically alter both the landscape and fortunes of the local population.

"Our only worry is where they will get the people to run the power plant from, says Mayor Pilkington. "We hope they will take locals, but there's no proof that this will happen. We have to think positively, support Mr Budge and pray that the development will be a positive influence on the whole community." To this end the Stainforth Community Partnership is running re-skilling projects in the town. Appropriately, they are being held in the town's Hope Centre.

Emission statement: the facts

Every ton of coal burned in a traditional power station generates around 3.7 tons of CO2.

CCS technology can make a coal power station 80 to 90 per cent more efficient at removing CO2 emissions from fossil fuels.

IGCC/CCS technology is also capable of capturing 90 per cent of the NOx and SO2 emissions, plus other key emissions like mercury, selenium and arsenic. These can then either be removed in production or reduced to trace amounts.

Associated technology such as electrostatic precipitators and fabric filters is known to be over 99.5 per cent efficient at stopping particle emissions associated with chronic bronchitis, aggravated asthma, and premature death.

'Coal has always been the safest, cheapest and most reliable energy source. It just needs cleaning up'