CCS involves catching carbon dioxide (CO2) -- which causes global warming -- from industrial plants and burying it underground.

"Carbon capture and storage has massive potential to allow us to meet our energy needs at the same time as cutting carbon emissions," UK Trade and Industry Secretary Alistair Darling said in a statement.

"CCS has the potential to reduce CO2 emissions from fossil fuel power stations by up to 90 percent and contribute 20 percent of global CO2 mitigation by 2050."

The winning project will have to include the whole technology chain, from capturing the gas at source to transporting and burying it.

But the nascent technology is still too expensive to be commercially viable. Although eight projects have been proposed in the UK, the companies behind them want government support.

The government announced 15 million pounds (US$29.4 million) of funding for energy technologies in its budget on Wednesday, but a spokesman for the DTI declined to say whether the winners of the contest would receive money from the government.

Whitehall thinks the UK could play a leading and potentially profitable role in CCS technology, using its depleted North Sea oil and gas fields as sub-sea storage sites.

MIXED REACTION

Some scientists welcomed the announcement but urged the government to get on with it.

"We need to replace many of our power plants in the next few years and have good potential for safe, geological storage under the North Sea," Hannah Chalmers of the Energy Technology for Sustainable Development Group at Imperial College London said. "It is crucial that we start building real plants now."

Others said the CCS push was short sighted and that government plans, also announced in the Budget 2007 on Wednesday, to raise taxes on landfill waste sites would be counterproductive.

"This puts further burden on the drive to incinerate municipal waste which will necessarily create further CO2 emissions," Peter Styring, professor of chemical engineering at the University of Sheffield said, adding that CCS was not a long-term solution to carbon emissions.

"This is a short term and short sighted approach," he said. "What is needed is not storage but utilisation of CO2 as a feed stock for chemicals."