St. Louis, Mo.-based Peabody Energy (NYSE: BTU), the world's largest coal producer, said today it would team up with Cambridge, Mass., startup GreatPoint Energy on coal gasification projects.

Peabody said it would become a minority stakeholder in GreatPoint, but did not disclose the size of the investment.

"Using GreatPoint Energy's technology to turn coal into natural gas while capturing carbon will provide a clean coal-based alternative to expensive natural gas imports, while using Peabody's industry-best reserve position," said Rick Bowen, Sr. VP of Btu Conversion and Strategic Planning at Peabody.

Peabody said GreatPoint uses a single-stage catalytic gasification process to create natural gas that is 99.5 percent pure methane and can be transported throughout North America using the existing natural gas pipeline infrastructure.

The company said GreatPoint completed testing in a pilot facility in Des Plaines, Ill., and has begun engineering for its first commercial project.

Under today's agreement, Peabody and GreatPoint will look at joint projects using Peabody reserves and land.

In September, GreatPoint raised $100 million in Series C funding led by Dow Chemical and Citi Sustainable Development Investments.

Also participating in the round were AES, Suncor Energy, and return backers Advanced Technology Ventures, DFJ, Kleiner Perkins Caufield & Byers and Khosla Ventures.