The CASTOR project will be inaugurated on Wednesday at Esbjerg on Denmark's western coast and will attempt to capture 90% of carbon dioxide produced by fossil-fuelled power stations such as coal plants or oil refineries.
The project works by capturing carbon dioxide emissions as they are produced by power stations and then storing them underground, to prevent them interacting with the atmosphere and producing the greenhouse effect.
During the absorption procedure, the CO2 is held in flue gas and then separated out using a solvent.
The solvent is then regenerated by an energy input, and the carbon dioxide is separated from the solvent and sent off for storage.
The solvent, with a reduced carbon dioxide content, is then routed back into the absorber.
"By developing technologies for carbon capture and storage, we can reduce emissions in the medium-term as we move to large scale use of renewable, carbon-free energy sources," said EU science commissioner Janez Potocnik.
In particular the EU, which has given 8.5 million euros for the project, hopes to make the process more attractive by cutting the cost, from about 60 euros per tonne currently to 20 euros per tonne in the future.
An EU Commission spokeswoman, Antonia Mochan, noted that the Danish project launch comes only two days after new US figures showing a big increase in the concentration of carbon dioxide in the atmosphere.
Research into alternative energy sources, such as wind and solar power, has surged of late partly due to soaring world oil prices, but also due to geopolitical tensions in the Middle East.
Projects like CASTOR "could be a medium term solution to the current dichotomy of our dependence on fossil fuel technology and the fact that alternative sources of energy aren't yet ready to satisfy the global demand for energy", said Mochan.
The EU executive said it also wanted to work with other countries on such new projects, as shown by a recent agreement with China on near-zero emission power plant technology.