RENEWABLE energy projects in the Tees Valley are in pole position to benefit from a new £40m Government grant scheme.

Energy Minister Malcolm Wicks yesterday unveiled a £25m funding package to tackle greenhouse gas emissions by capturing carbon dioxide from power plants and storing it in depleted North Sea oil and gas fields.

He also pledged a further £15m to fund the development of hydrogen fuel cells.

The grants coincide perfectly with a project already planned for Teesside.

Progressive Energy is planning to build a "clean" coal power station on the banks of the Tees, creating more than 100 jobs.

Last night, the company confirmed it will be applying for the grants.

Andy Brown, director of Progressive Energy, said: "We are ahead of the game - this has been our vision for eight years.

"If we are able to benefit from the money the Government is making available, that would be delightful."

The plant will "gasify" coal, rather than burn it, to create electricity.

Instead of being released as a greenhouse gas, the carbon dioxide produced in the process will be collected and sold for use in North Sea oil fields.

Another by-product, hydrogen gas, would also be collected and used in fuel cell technology being developed in Teesside.

"Teesside is structuring itself as a centre of excellence for fuel cells," said Mr Brown.

"If we could provide hydrogen for that application, it would complete the circle beautifully."

He said Progressive Energy, based in Gloucestershire, is in advanced discussions over finance for the plant, and is already in talks with energy suppliers to sell them the electricity it will produce.

It is the latest company attracted to the North-East by Renew Tees Valley, the agency spearheading growth in the renewables sector on Teesside.

Dermot Roddy, the agency's chief executive, is in China discussing deals to export technology developed in the region.

Mr Wicks said: "Reaching our ambitious target of cutting carbon emissions by 60 per cent by 2050 means action now to support emerging technologies that will enable us to burn coal and gas more cleanly.

"At the same time, with major expansion of coal-fired power generation expected in China and India, we want to put the UK at the forefront of what could be a valuable new export opportunity."