US utility Xcel Energy has announced an additional $3.5 million in funding for an Integrated Gasification Combined Cycle (IGCC) project in Colorado that will also capture and store some of its carbon dioxide emissions.

With the funding running through to 2007, the company plans to file an application with the Colorado Public Utilities Commission (CPUC) for approval of the project late next year.

Richard C. Kelly, president, chairman and chief executive officer of Xcel Energy commented: “We want to lead the effort to demonstrate that this technology works using western coal at high altitude.”

The 300-350 MW IGCC facility is expected to cost $500 million with construction due to begin after 2009.

The latest investment covers engineering studies and project development activities and the company may seek partners for the project, which will be the first such plant to include carbon capture and storage technologies.

The announcement comes after the recent approval of a new state law allowing regulators to grant cost recovery for carbon capture.

Environmentalists suggest the plans could increase support for similar facilities rather than new plants based around conventional technology.

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