The development of carbon capture and sequestration (CCS) technologies took a major step forward this week as progress was reported on a raft of pilot projects on both sides of the Atlantic.

UK government plans for a demonstration CCS plant capable of capturing carbon emissions from a coal-fired power plant and storing it in geological formations moved closer to fruition after the Department for Business, Enterprise and Regulatory Reform released the key criteria for the project ahead of the formal launch of the tendering process next month.

The government said it was on track to begin the competition process and hoped to have a demonstration plant capable of capturing 90 per cent of carbon emissions in place by 2014.

Business and enterprise secretary John Hutton said the project had the potential to establish the UK as a world leader in the technology, which he argued would be essential to curbing emissions globally.

"[CCS] has the potential to remove and safely store up to 90 per cent of damaging CO2 emissions," he said. "The capture technology can also be retro-fitted to existing coal-fired plants. This will be vital in tackling climate change on a global scale – China alone built an average of one new coal-fired power station every four days in 2006."

Meanwhile, energy giant RWE npower announced it would pre-empt the government's project and develop the UK's first CCS plant at Aberthaw Power Station in South Wales. The company said that the technology would be fully operational by 2010 and would provide a "crucial test-ground" for retro-fitting CCS capabilities to existing power plants.

An initial £8.4m investment will focus on developing a 1Mw capture plant in South Wales with further investment planned to create a capture plant of over 25Mw.

Andy Duff, CEO of RWE npower, said that with coal continuing to provide an important power source to the UK, the pilot project had a critical role to play in ensuring the country can maintain energy security while still reducing carbon emissions.

The two UK announcements also coincide with news from the US that the Department of Energy (DOE) has awarded the first three contracts for large-scale CCS projects as part of its plan to invest almost $200m in the technology over the next 10 years. The DOE said the three projects will conduct large volume tests for the storage of one million or more tons of carbon dioxide in deep saline reservoirs.

The spate of new projects come as politicians continue to cite the potential of CCS as justification for investment in new coal-fired power plants. Experts agree that with the US, China and India steadfastly committed to exploiting their coal reserves, CCS will have to play a critical role in tackling climate change.

However, many environmentalists remain unconvinced that the technology can be adopted fast enough to curb runaway climate change and are calling for a moratorium on new coal-fired power stations until the technology is proven.