The world's first power plant to demonstrate end-to-end Carbon Capture and Storage (CCS) technology is to be inaugurated today and will start operating fully next week.

The plant has been built next to the 1,600MW lignite fired Schwarze Pumpe power station in north Germany. It will capture some 100,000 tonnes of CO2 a year from the station, and store it deep underground in the Altmark gas field.

Run by Swedish utility giant Vattenfall, the performance of the $100m pilot plant will be carefully monitored globally, as the use of CCS is considered as vital to reducing global CO2 emissions by bodies such as the International Energy Agency and the European Commission.

"This is receiving a great deal of attention worldwide," said Vattenfall chief executive Lars G. Josefsson. "It is an important milestone in our efforts to radically reduce our own carbon dioxide emissions and develop technology to reduce emissions on a global basis."

The demonstration plant will provide much needed practical information on CCS, and is the key link towards developing a full scale commercial project, which would be about ten times the size.

The plant will run for ten years, and Vattenfall hopes to develop CCS with a view to using it on commercial-scale plants by 2020.

"The usual criticism of CCS is that it has never been demonstrated with all the stages joined up," said Professor Stuart Hazeldine, a CCS expert at the University of Edinburgh. "This is the first integrated system to run as a whole, which is a big step forward."

The plant will use an oxyfuel boiler, which involves burning fuel in almost pure oxygen, turning the waste gas to liquid, then compressing and burying it.

It is one of three types of CCS technology currently vying for dominance in the embryonic market for the technology. The other methods are post-combustion capture, which sees flue scrubbed from power station chimneys and turned into a transportable gas, and pre-combustion capture, which involves the removal of CO2 from a fuel prior to combustion.

Vattenfall claimed oxyfuel combustion is "currently the most promising method with regard to costs for capturing carbon dioxide at power plants," despite the technical challenges presented by air separation.

"Whilst pre- and post-combustion capture are relatively well established technologies, oxyfuel has not yet been fully practised anywhere in the world and has tremendous potential," said Jeff Chapman, chief executive of the Carbon Capture and Storage Association.

However, the Vattenfall said it is also continuing research on both post- and pre-combustion capture technologies, and is expected to test a post-combustion plant in three to four years time.

All three options will be considered when the next step of scaling-up the pilot plant to a demonstration plant is taken, the company insisted.

The UK has commissioned one CCS demonstration plant due to open in 2014 and experts are predicting that it will most likely feature post-combustion capture technologies.

Energy company Doosan Babcock is the only UK company thought to be testing oxyfuel combustion in Renfrew, Scotland, though the experiments are not part of a complete CCS project.