The money will go toward retrofitting existing coal-fired power plants owned by American Electric Power, Southern Co.
and Summit Texas Clean Energy to capture and store carbon dioxide, the chief greenhouse gas linked to climate change. The Energy Department is aiming to have the technology available commercially and to share with other big coal-using countries in eight to 10 years.
"Coal is a very important mix of our power. It generates over 50 percent of our electricity. The United States has 25 percent of the entire coal reserves in the world," Chu said. "We don't plan to turn our back on coal. Neither will China. Neither will India."
American Electric Power already is capturing and storing carbon dioxide at its Mountaineer power plant in Mason County. The federal stimulus funding is aimed at allowing the plant to capture and store 90 percent of carbon emissions from the plant.
"It is very important that we test these technologies and make them affordable," AEP Chief Executive Mike Morris said. "We can help others clean up coal use as well."
Southern Co. is getting $295 million for carbon capture at an Alabama power plant north of Mobile and Summit Texas is getting $350 million for work on a 400-megawatt plant planned for Midland-Odessa. The DOE says carbon dioxide from that plant will be piped underground to increase oil recovery in the Permian Basin.
The projects are expected to use an additional $2.2 billion in private capital.
Sen. Jay Rockefeller, D-W.Va., called the investments critical.
"If we're going to really improve our economy for decades to come, we have to have really substantial environmental investments," Rockefeller said. "Today's announcement is all about promise for our future."
Sierra Club spokesman Oliver Bernstein said the organization would prefer investments in green energy and jobs.
"We don't have any problems with research and investments in research and development, but, really, we see an energy future that moves beyond coal," he said. "Until coal can be burned cleanly and mined responsibly and not contribute to global warming, it shouldn't play a key role in our energy future."