China Huaneng Group, the mainland's largest power producer, has signed the country's first deal to license technology to the West - to turn coal into synthetic gas, which is then used to generate clean power. The accord signals that mainland technology has become internationally competitive in a mature segment of the clean coal power industry that has yet to achieve commercialisation, analysts said. Previously, development of such technology was dominated by large global energy giants such as General Electric and Royal Dutch/Shell. Mainland chemical companies such as China Petroleum & Chemical Corp (Sinopec) had imported it from Shell to produce chemicals from coal by first turning it into synthetic gas. The parent of listed Huaneng Power International's 52 per cent-held Xian Thermal Power Research Institute, co-owned with four other state-owned power generation firms, signed the deal with the United States' FutureGen in Pennsylvania on July 15. FutureGen is funded by private and public entities including China Huaneng, with a mandate to build a 'near-zero emissions' coal-fired pilot power plant in Illinois at an estimated cost of US$1.5 billion that will capture and store carbon emissions underground. Under the pact, China Huaneng will allow FutureGen to use its technology to turn coal into synthetic gas for another clean coal power plant in Pennsylvania. Such gas is then purified to extract sulphur dioxide and other impurities before it is burned to generate power by turning a turbine. 'Although the technology to turn coal into synthetic gas has a long history and is a mature one, this is encouraging news for China's clean coal power generation efforts,' said energy consultancy Songlin Group's managing director, Zhu Songbin. 'China's manufacturing cost advantage has probably contributed to Huaneng winning the deal.' Generating power from gas that has been synthesised from coal is more energy-efficient and typically produces 20 per cent less carbon dioxide than conventional pulverised-coal-fired plants. Combined with carbon capture technology, 'near-zero emissions' power generation has been the goal of companies around the world, but high construction costs have held back commercialisation. China Huaneng's 51 per cent-owned GreenGen received Beijing's approval in May to build a 250-megawatt, 2 billion yuan (HK$2.26 billion) pilot clean coal power plant in Tianjin by 2011.