The $A1 million trial is to be conducted in Victoria’s Latrobe Valley, home to the second-largest and lowest-cost brown coal reserve in the world.

Brown Coal Innovation Australia has put up the $1 million for the trial.

The technology involves converting coal or biomass into a water-based slurry that is directly injected into a large, specially adapted diesel engine.

The fuel burns to produce intense temperature and pressure in the engine, which provides power to turn electrical generators.

An existing laboratory-scale prototype engine will trial fuel based on Victorian brown coal and this work will be followed by trials using the same fuel in a large scale test engine in Japan.

This research will determine whether DICE can enable brown coal to produce Australia’s lowest cost, reduce carbon dioxide electricity for the staged replacement of existing coal power plants.

CSIRO Energy Group executive Dr Alex Wonhas said DICE technology could allow Australia to economically develop coal reserves while reducing the sector’s environmental impacts.

“Australia has the second largest brown coal resource in the world but current utilisation technologies are carbon intensive so we need to implement cleaner and more efficient ways to generate energy from coal,” he said.

“CSIRO is excited about the potential for DICE to lower power costs, halve CO2 intensity and create a new export market for both brown and black coal.”

The project is supported by industry partners including Exergen, Ignite Energy Resources, AGL, MAN Diesel & Turbo and EnergyAustralia.

“The energy sector has long been a lynchpin of our country’s economic prosperity and coal is expected to continue to make an important contribution in decades to come,” Wonhas said.

“I believe CSIRO has a critical role to play in supporting industry to minimise environmental impacts from coal through to the application of world leading science.”