European leaders shortlisted a dozen proposals to demonstrate large-scale carbon capture and storage at coal-fired power plants last month as eligible to share €900 million of the EU’s €5-billion stimulus funding package. The goal is to bring down the cost of carbon-neutral coal power — which the European Commission expects to continue to exceed the cost of conventional coal power in 2020 — and to gain more experience with underground storage of CO2.

Seven propose to capture CO2 post-combustion from the exhaust of conventional coal-fired power plants, a relatively inefficient process that nonetheless costs less up front — an attractive feature given today’s financial mess. Three are Integrated Combined Cycle Gasification or IGCC power plants that would pull CO2 out of coal-derived gases prior to combustion, akin to the U.S. FutureGen project that Bush killed and Obama may be reviving. Two more would concentrate their CO2 exhaust by burning coal in purified oxygen — the oxyfuel approach that Sweden’s Vattenfall is testing at a pilot plant in Germany.

Only 6 of the dozen eligible are likely to receive funding, because the euros are earmarked to six countries: €100 million for Italy plus €180 million each for Germany, Spain, the U.K., the Netherlands and Poland. Three projects, such as a 500-megawatt oxyfuel plant in Compostilla proposed by Spanish power firm Endesa, look assured to go foward as they are the only ones deemed eligible for their respective countries’ earmarks.

Nevertheless, all of these ‘cleaner coal’ plants have some hoops to jump still. To get the EU funds proponents must file detailed plans with the European Commission demonstrating their capacity to generate at least 300 megawatts of power, to safely sequester underground at least 85% of the CO2 generated, and to start spending stimulus cash by the end of 2010.

One coda to earlier posts on renewable energy transmission: The stimulus package also includes over €1 billion for electrical interconnections between EU countries and earmarks euros to 11 projects that should start to make good on the European Commission’s vision of supergrids to move renewable energy around Europe. Unfortunately the stimulus projects stop at the EU borders and will thus fail to bring North Africa’s rich reserves of solar and wind energy to Europe.

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This post was created for Energywise, IEEE Spectrum’s blog on green power, cars and climate