The research and development funding will come from an extension of the $300 million COAL21 Fund adopted last year, which imposes a voluntary coal levy on black coal producers.

Australian Coal Association executive director Mark O'Neill has dismissed claims that the billion-dollar commitment was made to avoid a hike in mining royalties.

O'Neill said the decision reflects the industry's growing confidence in the role clean coal technology can play in reducing emissions, and growing community concern over climate change.

“This should leave no doubt about the coal industry’s intention to partner with State and Federal governments on nationally significant clean coal projects,” he said.

“While the coal industry is prepared to play a leading role, power generators, other industries and the broader community all need to share the costs of technological change.”

The funding will be directed at creating a viable and sustained future for coal mining in Australia, by developing technologies such as carbon capture and storage and geosequestration.

O'Neill also said that the development and deployment of breakthrough technologies was primarily a national and global challenge, rather than a state-by-state one.

Queensland Resources Council chief executive Michael Roche said the voluntary fund would raise the bar for other industries to follow.

The coal fund has already begun a joint assessment with the Queensland Government of a major integrated gasification combined cycle (IGCC) project with near-zero emissions in Queensland, where more than half of the nation's black coal is produced.

The industry fund is also keen to support worthwhile projects in New South Wales, the other big black coal producing state.

Greens senator Christine Milne welcomed the industry-funded scheme but called for taxpayer funding to be diverted from the coal industry towards the renewable energy, energy efficiency and biofuels sectors.

“While it remains to be seen whether burying coal's pollution can be demonstrated to be safe, sustainable and economically viable, we welcome the move by coal corporations to invest a proportion of their own profits into this research,” she said.

“Unlike renewable energy and efficiency, geosequestration is at least a decade from reality and will not be able to play a role in the immediate emissions reductions we need if we are to prevent runaway climate change.”

Both O'Neill and Roche said they were confident the industry would receive credit for its voluntary efforts under any future carbon pricing scheme introduced in Australia, whether through emissions trading or other mechanisms.

“Credit for this sort of action is an important principle recognised and accepted in every carbon pricing model that has been advocated in Australia over recent years,” they said.

Members of the COAL21 Fund include Xstrata Coal; Anglo Coal; BHP Billiton; Coal and Allied Industries; Enhance Place; Ensham Resources; Excel Coal; Felix Resources; Gloucester Coal; Griffin Coal Mining Company; Hunter Valley Energy Coal; Macarthur Coal; Muswellbrook Coal; New Hope Corporation; Peabody Pacific; Rio Tinto; Wesfarmers Energy; and Whitehaven Coal Mining.