Capturing and storing carbon dioxide from power stations could help Britain meet its energy needs while curbing greenhouse gas emissions, MPs say.
Capturing carbon dioxide could be economic, the committee believes
The Commons science and technology committee says in a report that all new coal power stations should be suitable for carbon capture.
The costs are likely to be similar to using renewable energy, it says.
It urges the government to lead reform of international treaties to ensure storing CO2 underground is legal.
"The UK is struggling to meet its targets to reduce CO2 emissions by 20% below 1990 levels by 2010 and 60% by 2050," the report notes.
"At the same time, domestic concerns over security of supply are increasingly dominating the debate about energy policy, reflecting unease over UK dependence on imported gas.
"We find that there is significant scope for carbon capture and storage technology to contribute both to reducing CO2 emissions in the UK and abroad, and to enhancing the security of the UK's future energy supplies."
Storing carbon dioxide in rock has already been shown to be safe and effective by the Norwegian company Statoil, which has been piping the gas down into a reservoir under the sea floor for almost a decade.
But capturing the gas in the first place is a different issue.
Using current technology reduces the efficiency of power stations by about a quarter, meaning that more need to be built to produce the same amount of electricity, with costs rising as a result.
Nevertheless, the committee concludes that the costs of generating low-carbon electricity this way will be "comparable" to nuclear fission or renewables such as solar panels and tidal turbines.
But it chastises the government for a lack of "ambition and commitment" to date.
Last year, the DTI announced a £25m funding package to establish demonstration projects, and is also involved in a partnership designed to develop the technology in China, which like the other giant developing economies of Asia is heavily reliant on coal.
A number of other countries including the US and Australia are also working on demonstration projects; some will also use pressurised CO2 to pump currently inaccessible oil from oil wells.
But there may be legal obstacles, with international treaties such as the Ospar Convention likely to rule illegal plans to bury CO2 under some portions of the ocean floor.
The committee urges the government to lead international efforts to overturn these hurdles, with the aim of having demonstration projects up and running by 2009.