The Tees Valley could be the site of one of Britain's first carbon capture power stations, the government says.
Energy Minister Malcolm Wicks said sites near the River Tees could house an 800mw station, which would store captured carbon dioxide (CO2) offshore.
Speaking at Middlesbrough Football Club he said North East homes burned more gas than many other areas of the UK.
The Prime Minister has asked Mr Wicks to lead a review of Britain's long-term energy policy.
A consortium including Progressive Energy and Renew Tees Valley is looking at two sites south of the River Tees for the gas combined cycle power station.
It would be the first of it's kind in the UK and capable of capturing CO2 which will then be piped offshore and used in the extraction of oil from the North Sea fields.
Exciting solutions
Mr Wicks said: "North East homes on average burn more gas, but use less electricity, than other regions in the UK, as a result of that around 2.8 tonnes of damaging carbon dioxide per person is released into the atmosphere.
"Carbon capture offers some exciting solutions to dealing with some CO2 emissions and Teesside seems to be at the forefront of exploiting that technology.
"One thing is clear, doing nothing is not an option. There are some tough decisions ahead, some big challenges, but no one solution. How the people and businesses of the North East see their energy future is a vital part of that solution."
A committee of MPs has already said capturing and storing carbon dioxide from power stations could help Britain meet its energy needs, while curbing greenhouse gas emissions.
The costs are likely to be similar to using renewable energy.