The CSIRO has released a report saying carbon capture technology can work in Australian coal-fired power stations.

Scientists have been testing the technology in Victoria, New South Wales and Queensland, as part of a $20 million program to reduce carbon dioxide emissions.

CSIRO spokesman Dr Paul Feron says the system works but it reduces the efficiency of power stations by about 30 per cent.

"That's something that the power generators are very anxious about," he said.

But he is confident they can improve upon that.

"In the last 20 years we've seen a performance improvement of already 50 per cent and so we're making good progress already," he said.

"We can reduce that power loss by another 50 percent in the next 10 years or so."

He says the technology could be in use in Australia within 20 years.