The US government's carbon capture and storage (CCS) efforts stepped up a gear this week, with the start of construction on the government's first industrial-scale scheme and funds worth $41m set aside for another 16 research projects.

Work on the plant in Decatur, Illinois, which received $141m of public money and another $66.5m from private sector sources, started just a few weeks after American Electric Power abandoned plans to build its $668m CCS facility.

When operational in 2013, the Decatur plant will capture and store 1m tonnes of carbon dioxide (CO2) per year generated by ethanol production at the nearby Archer Daniels Midland biofuels plant.

Since the captured CO2 will be produced from biologic fermentation, the plant claims to have a negative carbon footprint, meaning that the storage results in a net reduction of carbon in the atmosphere.

The gas will be held 7,000 feet beneath the surface in the saline Mount Simon Sandstone formation, which the Department of Energy (DoE) estimates has the capacity to sequester all of the 250 million tonnes of CO2 produced each year by industry in the Illinois Basin.

The Obama administration intends to deploy carbon capture, utilisation and storage technologies within 10 years and wants to bring five to 10 commercial demonstration projects online by 2016.

The DoE said its selection yesterday of 16 projects across 13 states to share $41m funding over three years would further the aim.

Each project will focus on developing technologies capable of capturing at least 90% of CO2 produced, as well as reducing the added costs at power plants to no more than a 35% increase in the cost of electricity produced.

"Charting a path toward clean coal is essential to achieving our goals of providing clean energy, creating American jobs and reducing greenhouse gas emissions," US energy secretary Steven Chu said in a statement. "It will also help position the United States as a leader in the global clean energy race."