The government has relaunched a 1bn competition that aims to develop the process of capturing carbon dioxide from power stations and storing it for future use.

Cooling towers at gas power station in Berkshire (Getty)

The idea of carbon capture and storage (CCS) technology has been expanded to include gas as well as coal, Energy Minister Charles Hendry has said.

Mr Hendry said £1bn would be offered to fund CCS projects, after earlier plans for the UK's first coal-fired power plant with such technology were abandoned.

ScottishPower's plant at Longannet, Fife, had been the only remaining site in the government competition unveiled last year for funding worth up to £1bn to develop the technology, which is hoped to cut up to 90 per cent of carbon emissions from coal power.

But former energy and climate change secretary Chris Huhne said last October that it had not been possible to reach a satisfactory deal on the scheme and as a result "we will not be proceeding with the project".

The idea of CCS has been proven on smaller sites where carbon has been taken from power stations and stored underground, in areas such as exhausted oil fields.

Speaking this morning on BBC Radio 4's Today programme, Mr Hendry said: "What we've done this time is we've framed the competition very much taking account of what industry wants to do and so it's much broader.

"We're looking at gas as well as coal, we're looking at a range of different technologies, we're looking at investment in the core infrastructure. There's a whole range of different elements which can be fitted into this competition and industry is very excited about it."

He added: "There is huge interest. We had an industry day just a few weeks ago and nearly 200 companies from around the world came here to understand how we're looking at doing this.

"£1bn is more than any government anywhere has allocated to a single project and so we're making it very clear that this is a real world leadership moment for us."

Mr Hendry said there was a wish to move the technology from a "pilot scheme to an industry".

He said: "It could be an absolute global game changer, we think this could be 100,000 jobs to the UK in the 2020s. We think this is an industry where we can reasonably hope to lead the world because we've got some of the best skills which are available, we've got some of the best storage sites which are available."

Companies have until July to submit a bid, before a decision on which projects will go ahead is expected in the autumn. Schemes will have to be operational by between 2016 and 2020.