UPDATE 1-RWE picks Huerth for novel coal-fired plant

(Details from RWE statement, background)

HAMM, Germany (Reuters) - RWE AG (RWEG.DE) said on Friday it has selected the western German town of Huerth for a novel 450 megawatts brown coal fired power plant that will capture and store carbon dioxide (CO2) and come on stream by late 2014.

Spokespersons at the inauguration of another power plant in Hamm told reporters that RWE was open for partnerships for the 2 billion euros ($2.95 billion) project, for which it had set aside 1 billion euros already.

RWE said in a statement this will be a carbon capture and storage plant (CCS), confirming announcements in March 2006 it was planning such a venture within that timeframe.

"We aim to lead the way in the field of climate friendly technology with our expertise," said Chief Executive Juergen Grossmann.

The plant will be constructed to convert coal into synthetic gas and stream off and store emissions.

RWE said that to realise this kind of plan on an industrial scale, it needed the right legal and financial environment and acceptance in the population.

Advances in clean-coal technology are gathering pace as power firms, industry's biggest polluters, face pressure to curb CO2 emissions, which are blamed for climate change.

New coal fired plants in Germany face tough CO2 limits under Europe-wide emissions trading rules as well as opposition from local communities, which are against coal as a fuel.

This poses challenges to utilities at a time that Europe's future gas supply security is at the mercy of mostly Russian providers, and nuclear energy is due to be phased out by 2021 under existing law, while renewable energy needs to catch up.

Norwegian oil and gas producer StatoilHydro ST.OL said on Wednesday it would decide in late 2008 whether to build a carbon capture and storage plant at Mongstad for start-up in 2014.

The technology must still demonstrate it can work at such a large scale, especially because of its high cost.

RWE said separately its RWE DEA unit would explore onshore storage possibilities in the northern Schleswig-Holstein state where the CO2 from Huerth could be piped, as the region's geography lent itself to such projects. (Reporting by Matthias Inverardi)