Construction is set to begin on one of the largest coal gasification power plants in the USA after the Indiana Department of Environmental Management issued an air permit for the project.

The 630 MW power plant at Edwardsport Station in southwest Indiana will use integrated gasification combined cycle technology (IGCC) and could also become one of the first demonstrations of carbon capture and storage (CCS) at a power plant.

“We have an opportunity to make history with the Edwardsport plant,” said James L. Turner, president and chief operating officer, Duke Energy US Franchised Electric and Gas. “The facility could very well be one of the cleanest coal-fired power plants in the world. It will produce nearly ten times as much energy as the existing Edwardsport plant with much less environmental impact.”

“The decision on the air permit is the last approval we needed to start construction,” said Duke Energy Indiana president Jim Stanley. “Thanks to state leadership, federal support, and unwavering local enthusiasm, southwest Indiana will be home to the nation’s first power plant to use coal gasification technology on this scale.”

Duke Energy says it will carry out a carbon capture and sequestration study for a portion of the plant’s carbon emissions and will implement the technology if it is deemed feasible.

“This could be one of the first demonstrations of carbon capture and storage at a power plant,” said Duke Energy President Jim Stanley. “This project is technologically important not just for Indiana, but for the nation.”

The new plant will cost approximately $2 billion to construct, offset by more than $460 million in future local, state and federal tax incentives. The plant will result in an average electricity rate increase of approximately 16 percent phased in from 2008 through 2012.

Due to be completed by 2012, the new plant will replace four older, less efficient generating units capable of generating approximately 160 MW at the Edwardsport site. Some construction site work is expected to begin in early February, and major construction will begin in the spring.