The Indiana Utility Regulatory Commission has granted Duke Energy permission to construct a clean coal power plant in Edwardsport, Indiana.

If the project proceeds, it will be the first commercial-scale coal gasification power plant built in the US in the last 10 years. The 630MW plant will use advanced integrated gasification combined-cycle technology.

Jim Stanley, president of Duke Energy Indiana, said: In the Midwest, coal is plentiful and low-cost, and finding ways to burn it cleanly is fundamental to meeting our customers’ demand for power. The Edwardsport facility could very well be the cleanest coal-fired power plant in the world once it’s completed.

An air permit is still necessary from the Indiana Department of Environmental Management. If the permit is approved, Duke Energy could begin construction early next year and start producing power from the site by early 2012. The new plant will be able to produce nearly four times as much power as the existing plant, including 45% fewer carbon dioxide emissions per net-megawatt hour.

The plant will cost approximately $2 billion to construct, but the cost will be offset by more than $460 million in local, state and federal tax incentives. The plant will result in an average electric rate increase of approximately 16% phased in between 2008 and 2012.