Rudd said the plan would be the centrepiece of his address to the United Nations General Assembly in New York next week, adding that British Prime Minister Gordon Brown had already offered his support.

The institute would promote research and investment to help meet a G8 commitment to have at least 20 industrial scale carbon capture and storage (CSS) projects in operation by 2020.

CSS involves capturing carbon dioxide as it is released into the atmosphere, compressing it and then pumping it into depleted oil and gas fields or other safe underground chambers.

Carbon dioxide and other greenhouse gases blamed for global warming are produced by burning fossil fuels and Rudd noted that Australia is the world's largest exporter of coal.

Any effective solution to climate change must deal with clean coal and CSS could be a large large part of the solution, he told a news conference.

"We the government want this global carbon and storage institute in Australia to be the global go-to place across the board for clean coal technologies and their application. That is the ambition.

"Rather than simply put an idea out there, we have decided that we need to have some skin in the game (make a significant investment)," he said.

"So we will be providing up to 100 million dollars (80 million US) a year to fund this global carbon capture and storage institute."

Rudd said CSS had the potential to capture nine billion tonnes of carbon by 2050, about 20 percent of the reduction needed to cap atmospheric levels at 450 parts per million.

There are just five pilot projects worldwide, including one in Australia's Victoria state.

Rudd, whose first act when he took office last year was to ratify the Kyoto Protocol on global warming, said there was a danger the G8 ambition would end up as simply a politically pious statement.

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