In a move aimed at bringing so-called "clean coal" a step closer to reality, the FutureGen Alliance on Tuesday announced it has selected Mattoon, Ill., for a $1.5 billion plant that will test a swath of technology for turning coal into "near-zero"-emission energy.

FutureGen, a coal and utility industry group, has partnered with the U.S. Department of Energy to fund the project, which will explore the feasibility of different technologies aimed at lowering emissions from cheap and abundant -- but heavily polluting -- coal.

The project also will capture and store underground carbon dioxide generated in the process.

The FutureGen Alliance expects the plant to be up and running by 2012. The DOE estimates the project would generate about 275 megawatts of electricity, roughly equivalent to a medium-size traditional coal-fired power plant that would supply energy to about 275,000 homes, according to a 2005 press release.

But as the alliance lauded its progress, not everyone was impressed.

"It's a huge waste of money," said Daniel Englander, a Greentech Media analyst and PV News assistant editor, about the mostly tax-funded project. Project costs have spiraled upward from earlier government estimates of $950 million.

"We don't need this grand gesture of creating a massive federal project that we aren't really sure is going to work," Englander said.

There also are too many unknowns for Englander's taste.

"They haven't said what type of technology is going into the plant," he said. "What's the end game? Will it be reproducible?"

The news also highlighted the U.S. government's stance on which energy technologies deserve federal support, he said. He pointed to the Senate, which last week failed to pass a proposal to require utilities to get at least 15 percent of their power from renewable sources (see Senate Rejects Green Incentives to Pass Energy Bill).

Englander would prefer to see more government money going into renewable energy produced from solar panels and other technologies that already have been proven to work.

But he isn't saying that clean-coal technologies shouldn't be funded at all.

"If we are going to start looking at clean coal, there are better ways to do this than build these brand new massive power plants," he said, pointing to such approaches as venture capital and private equity investments.

It's easy to see the allure of the idea of cleaner coal.

The DOE expects coal to overtake oil as the largest source of energy-related carbon-dioxide emissions by 2010, making up 43 percent of the world's emissions by 2030.

And, in an atmosphere where regular coal plants have become controversial, technologies to make coal cleaner-burning have been gaining traction (see Coal Under Fire).

On Tuesday, the DOE said it was giving $67 million to the Midwest Geological Sequestration Consortium for a project to test the ability to safely and economically store more than 1 million tons of carbon dioxide in the Illinois Basin, a geologic depression that spans most of Illinois and extends into Indiana and Kentucky. The project is expected to cost $84.3 million.

Last week, St. Louis-based coal company Peabody Energy (NYSE: BTU) said it became an investor in a similar $1 billion FutureGen-like enterprise in China.

In late September, GreatPoint Energy said it had raised $100 million in a third round of funding.

And in October, the U.S. Environmental Protection Agency said it would develop regulations for capturing carbon-dioxide emissions from power plants and injecting them deep into rock formations for long-termstorage(see New Policy Could Put CO2 Underground).