Princeton, N.J.-based NRG Energy [1] (NYSE: NRG [2]) and Portsmouth, N.H.'s Powerspan [3] said today they would conduct a large scale demonstration of carbon capture and sequestration, or CCS, technology at a coal-fueled power plant in Texas.

NRG said a 125 megawatt carbon dioxide capture facility using Powerspan's ECO2 system would be used on flue gas at NRG's WA Parish plant in Fort Bend county.

To date, CO2 capture demonstrations on coal-fueled power plants have been conducted only at pilot scale of one to five MW of electricity, according to NRG.

"Large-scale, integrated CCS demonstrations provide commercial validation of the critical enabling technologies needed to reduce CO2 emissions significantly while maintaining coal-fueled power plants as a vital component of our nation’s electricity supply," said Powerspan CEO Frank Alix.

The project, scheduled to be operational in 2012, is expected to capture and sequester 90 percent of incoming CO2, or about one million tons of CO2 annually.

NRG said this would rank it among the world's largest CCS projects and potentially the first to achieve commercial scale capture and sequestration from an existing coal-fueled power plant.

"The successful deployment of 'clean coal' technology like ECO2 is absolutely essential to our common goals of reliable and affordable electricity, enhanced energy security and substantially reduced greenhouse gas emissions," said David Crane, president and CEO of NRG.

Once captured, NRG said the CO2 is expected to be used in enhanced oilfield recovery operations in the Houston area.