RWE npower has teamed up with five partners for the government's competition to build the first commercial scale project to bury carbon emissions from power plants underground, the German utility said on Thursday.

The closing date for entries into the competition for hundreds of millions of pounds in government funding for carbon capture and storage (CCS) is March 31.

RWE is looking at building a demonstration plant near London with gas and chemicals company BOC, U.S.-based engineering company The Shaw Group, Tullow Oil, Norwegian marine transport company I.M. Skaugen, and carbon capture specialists Cansolv Technologies.

Discussions with other potential partners in the bid to build the world's first large scale CCS project continue.

The government has not said how much taxpayers' money it is prepared to put into the winning project, but hopes taking the lead could mean Britain making billions of pounds and creating many jobs from exporting the new technology worldwide.

"CCS is currently unproven at the level needed for full scale power generation, but if it can be demonstrated to work, the potential for global CO2 reductions is huge," RWE npower Chief Executive Andy Duff said in a statement.

RWE's plan to remove carbon dioxide after coal is burnt in power plants and then bury it underground means it is one of only two projects in the running for the CCS prize after the government ruled out other approaches last October.

A spokeswoman for the UK arm of RWE said one of the possible sites for building a new coal plant with CCS was at Tilbury near London, but that the company wanted to concentrate on winning the CCS competition before moving ahead with the coal plant.

"Right now, CCS is ahead of the power plant," she said, adding that no decision had been taken on building a coal fired plant.

"The economics need to stack up much better than they do now," she said.

The UK arm of German energy giant E.ON is still in the running with its plan for a "clean" coal plant at its Kingsnorth power station in Kent.

Another E.ON proposal to remove the climate-warming gas before combustion was scuppered by the government's decision to limit the competition to post-combustion plans because it could be fitted to existing plants in places like China, which is building more than one coal fired plant a week.

CCS is seen by its supporters as a potential saviour for coal-fired power generation and the environment, while environmentalists argue the unproven technology could spur a wave of new "CCS ready" plants to pollute the atmosphere and that the technology to bury it safely may never arrive.

Either way, most parties agree time is running out and that large scale CCS is too expensive.

"Progress if anything is too little at the moment. The problem is money," Derek Taylor, the European Commission official responsible for international cooperation on clean coal technologies, adding these were his personal opinions.

"The UK is effectively the only member state that has promised to put money up. Clearly there's a need for member states and industry to put money forward. At the moment we don't have any."