Clean coal plants reduce carbon dioxide emissions.

The plant would use a process known as gasification, which traps carbon dioxide underground instead of releasing it into the atmosphere.

Project leader Progressive Energy says it is considering two sites on the south bank of the River Tees.

If the 800 megawatt plant is built, more than 2,000 jobs could be created, according to the company.

Hydrogen produced during gasification can be used to power turbines and make electricity.

Carbon monoxide is also produced and could be piped to the North Sea oil fields and used to force out more crude oil from reserves previously considered too depleted to be profitable.

Green businesses

Currently, power stations release carbon dioxide into the atmosphere, which many scientists claim causes global warming.

Clean coal plants have been pioneered in the US, where oil producers pay power companies for carbon dioxide to keep their reserves under enough pressure.

Progressive Energy, based in Gloucestershire, has been working with Renew Tees Valley (RTV), which is funded by the development agency One NorthEast, to encourage green businesses in the region.

RTV chief executive Dermot Roddy said the project could create up to 2,000 construction jobs, then operate with a workforce of about 200.

Hydrogen pipelines

Mr Roddy said private finance would pay the construction costs and the operators would sell electricity to the National Grid.

He said: "It will be a huge driver for the local economy. We are majoring in a big way in renewable energy."

Teesside has much experience in the chemical industry and has a network of hydrogen pipelines and huge underground storage sites.