The deal calls for Atlanta-based Southern to work with Shenhua as well as government agencies and universities.

Southern already has a deal with Houston-based engineering firm KBR to market the technology used at Kemper and any modifications that arise from the deal with Shenhua.

Industry observers say the research deal may be a big step toward commercialising the technology.

The technology could be adopted to develop more of China’s soft coal reserves.

Currently the Chinese gasify hard coal to make plastics and liquid fuels but the new technology would make it possible to use soft coal such as lignite instead.

The huge cost overruns at Kemper have subdued the market for additional plants in the US, especially after a surge of natural gas made it financially viable to use it as fuel for power plants.

Gasifying coal and taking out carbon dioxide could still have appeal overseas.

So far the technology has been licensed to only one plant in China, where construction has not been finished.

Outside China, it may also have appeal in other areas with substantial lignite reserves, including Poland and Australia.