The U.S. Energy Department said two projects will receive up to $408 million to develop advanced "clean coal" technologies.
Hydrogen Energy International LLC in California will get up to $308 million and Basin Electric Power Co-op in North Dakota will get $100 million.
Hydrogen Energy will use the funding to build an integrated gasification power plant in California's Kern County that will convert coal and petroleum coke into hydrogen and carbon dioxide.
The hydrogen will fuel the plant, while the carbon dioxide will be stored in nearby oil reservoirs. Once completed, the project will capture more than 2 million tons of carbon a year.
Basin Electric Power will use the government money to help deploy carbon capture and sequestration technology at the company's existing Antelope Valley Station near Beulah, ND.
The funding announcement followed the department's decision last month to restart FutureGen, the country's first commercial-scale carbon capture and sequestration project.
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