WASHINGTON -- Montana, Wyoming and other coal-producing states are expected to intensify their efforts to land a futuristic, $1 billion power plant after the Energy Department and an international group of energy companies formally agreed to build the low-emission project known as FutureGen.

Secretary of Energy Samuel Bodman on Tuesday announced the agreement to build a plant that will turn coal into electricity and hydrogen while capturing pollutants, including carbon dioxide, and serve as a prototype for future emissions-free power plants.

Plans call for the FutureGen plant to begin operations in 2012 and generate 275 megawatts of electricity, enough to match a medium-size coal-fired plant and supply power to about 275,000 households.

The FutureGen Industrial Alliance, which will contribute $250 million to the project, includes Kennecott Energy of Gillette, Wyo., five other power companies from around the country and two in Australia and China. The alliance plans to issue a site selection solicitation early next year, to develop a shortlist by mid-2006, and choose the final site in mid- to late 2007.

Members of Congress, county commissioners and university officials from Wyoming and Montana have been pushing to secure the plant and the accompanying federal research dollars and jobs since 2003, when President Bush proposed the idea. Both states have held university forums to discuss it.

Government and industry officials in 14 states have said they are interested in hosting the prototype plant, according to the alliance.

The state of Idaho has several proposals for coal-fired and coal-gasification power plants from Jerome to Soda Springs. The projects, however, do not use the same technology as FutureGen.

The project involves coal gasification technologies, which turn coal into a highly enriched hydrogen gas that can be burned more cleanly than the coal itself. The process will eliminate some air pollutants, including sulfur dioxide and nitrogen oxides, and convert them to usable byproducts like fertilizer. Mercury pollutants also will be removed.

The hydrogen also could be used to power a fuel cell to produce clean electricity or fed to refineries to upgrade petroleum products. President Bush also has pushed an initiative to develop a hydrogen-powered fleet of cars and trucks.

FutureGen will be designed with the latest technology to capture at least 90 percent of emissions of carbon dioxide, a so-called "greenhouse" gas linked to global warming, and inject it as a compressed fluid deep underground. The project will test whether it can remain sequestered underground indefinitely.

The plant, operating with near-zero emissions, could produce power costing only 10 percent more than today's electricity, the Energy Department said.

The alliance members are American Electric Power of Columbus, Ohio; BHP Billiton of Melbourne, Australia; CONSOL Energy Inc. of Pittsburgh; Foundation Coal of Linthicum Heights, Md.; China Huaneng Group of Beijing; Kennecott Energy of Gillette, Wyo.; Peabody Energy of St. Louis; and Southern Co. of Atlanta.

Noelle Straub works in the Washington bureau of the Billings Gazette in Billings, Mont.