The report, prepared by the Global Carbon Capture and Storage Institute, found that it would cost up to 78 per cent more to produce electricity from coal if fully fledged clean coal technology was installed.

The report found that carbon capture and storage in coal plants would be competitive with other energy sources only if a high carbon price existed.

That would mean a carbon price of between $61 and $112 a tonne, and between $80 and $90 a tonne for large-scale technology needed for the massive New South Wales and Victorian coal plants.

The Treasury estimates that, under the Federal Government's emissions trading scheme, the carbon price will hit $80 a tonne in real terms in 2038.

The institute's chief executive, Nick Otter, said yesterday that it was crucial for a commercial-scale clean coal project to be operating by 2014, with fully commercialised plant existing by the early 2020s.

''Governments need to provide short-term incentives to invest,'' Mr Otter said. ''But in the long term there will have to be a long-term framework and that will include things like a carbon price.''

The Federal Government will spend $2.4 billion over the next nine years developing two to four commercial-scale carbon capture projects. A spokesman for Resources Minister Martin Ferguson said a shortlist of projects would be released by the end of the year.

Professor Richard Hillis, head of the University of Adelaide's Australian School of Petroleum, said it was natural that carbon capture and storage would take some time to develop and that initially it would be expensive.

''If you think of the oil industry when it first began, it didn't develop in a matter of weeks, it took decades, and carbon capture will go through the same process,'' Professor Hillis said.

The Global Carbon Capture and Storage Institute was established by the Rudd Government and includes the US, UK and Japan, along with a number of major resource companies, among its members.