The process separates out regulated pollutants, such as mercury, as well as carbon dioxide, the main greenhouse gas.

"This plant will be hands down the lowest-emitting plant in the country," said Kurt Waltzer, a Midwest coal expert for the Clean Air Task Force, a nonprofit organization.

Coal generates about half of US electricity. It emits more carbon dioxide than any other fuel.

But emerging technology can be added to coal plants to capture the gas for burial underground. No commercial scale coal-fired power plants currently do that, but IGCC coal plants can add the new equipment more cheaply than conventional plants, many coal experts and environmentalists say.

A spokeswoman for the Indiana utility agency said it ordered Duke to initiate an investigation within six months on the possibility of capturing its CO2 emissions and pumping them into aging oil fields to boost crude output.

The new plant will replace an existing 160 MW coal plant that was built in the 1940s and 1950s.

Duke still needs an air permit from the Indiana Department of Environmental Management, but environmentalists said the process should be quick as the plant is expected to be cleaner than a conventional coal plant.