China and the European Union are on the verge of announcing a large investment into new technology for reducing the greenhouse gas emissions from coal-fired power stations, the Financial Times reports.

Under the proposed agreement, the EU would assist China to build by 2015 a new power station to demonstrate technologies both for carbon sequestration and for clean coal.

The cost of the new station could be as much as $500 million and the EU is expected to provide the difference in investment between building a standard station and the new climate friendly design.