June 12 (Bloomberg) -- The stalled FutureGen “clean coal” project in Mattoon, Illinois, won the tentative backing of the Obama administration, setting the stage for engineers to begin designing a near zero-emission coal-fired power plant.

The U.S. Energy Department reached a provisional agreement for the government to provide $1.1 billion in funding, and industry sources to contribute as much as $600 million. The project must still clear cost and design reviews as well as fundraising goals before construction could start, according to a department statement today outlining a project timetable.

FutureGen, which could start construction as early as 2010, would create a coal-fired plant that would capture and bury its own carbon dioxide emissions, gases that have been blamed by scientists for global warming. The Bush administration, which crafted the idea as a flagship project for the clean use of coal for electricity, canceled it after costs exceeded estimates.

Illinois lawmakers and project organizers have been working to revive the plant, saying it would create as many as 700 construction and 100 permanent jobs while reducing emissions. The economic stimulus measure passed in February provides $3.4 billion for carbon-capture projects such as FutureGen.

A viable use of the technology would be an important advance because coal generates about half the electricity in the U.S. and 30 percent of the greenhouse-gas emissions that contribute to global warming. Environmental groups, including one led by former Vice President Al Gore, have run television ads describing “today’s clean-coal technology” as a fantasy.

To contact the reporters on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net.

Last Updated: June 12, 2009 11:07 EDT