Two eastern Illinois towns just a few miles apart are among the four finalists for a $1 billion, coal-fueled power plant that developers say will produce almost no air pollution.

Mattoon and Tuscola made the cut Tuesday along with two sites in Texas. A final decision is expected in the second half of next year, said officials with the FutureGen Alliance, the consortium of coal and electric companies that is developing what they're calling the "ultimate power plant."

"It's every small town's dream," Sara Holmes, 52, a lifelong Tuscola resident, said Tuesday afternoon.

Twelve sites in seven states were considered for the plant, which is expected to start running by 2012. Two other Illinois locations _ Effingham and Marshall _ didn't make the cut, but Illinois is the "logical choice" for the plant, Gov. Rod Blagojevich said.

"We have the coal, the geology, and the strong support on the federal, state and local level for bringing the world's cleanest coal plant to Illinois," Blagojevich said in a statement.

FutureGen CEO Mike Mudd announced the finalists at a news conference in Washington that was broadcast over the Internet.

"The room went up in a roar of cheers," said Mattoon city administrator Alan Gilmore, who watched the Webcast with other city leaders. "They announced Mattoon first, so none of us in the room had any idea who the other three finalists were. It took a little while for things to calm down."

FutureGen involves technology that converts coal into highly enriched hydrogen gas that burns more cleanly than coal. Plans call for the 275-megawatt plant to capture most of its emissions of carbon dioxide, a "greenhouse" gas widely blamed for global warming, and inject them permanently into underground reservoirs, a process called sequestration.

The FutureGen Alliance, which includes St. Louis-based Peabody Energy Corp., has committed more than $250 million to the project. The U.S. government is putting up about $700 million.

Illinois has pledged $80 million in financial incentives to lure the project. Texas has put up about $20 million for infrastructure improvements and has passed a law that protects the alliance from any legal entanglements arising from the plant's carbon dioxide.

Mattoon, population about 18,000, and Tuscola, with about 4,500 residents, are 23 miles apart and lie between U.S. Route 45 and Interstate 57. They have submitted proposals touting more than 200 acres of available land close to town, proximity to natural gas and oil pipelines, railroads and high-voltage electricity transmission lines, and plenty of water.

Mattoon said it could provide the necessary 3.6 million gallons of water per day by using treated outflows from its own sewage treatment plant and one in neighboring Charleston. Mattoon and Tuscola also share a thick underground sandstone formation that will ensure long-term storage of carbon dioxide, Mudd said.

"The structure of our land is a very compelling factor," said Charles E. White, Mattoon's 73-year-old mayor. "We are just perfect for what they need."

The Texas locations are Jewett, which is about 100 miles south of Dallas, and near Odessa, in the western part of the state. Both sites are considerably larger than those offered by Illinois, and both sit close to existing transmission lines.

The other sites that didn't make the cut were in Kentucky, West Virginia, Ohio, North Dakota and Wyoming.

FutureGen wants to measure the progress of the finalists' proposals at a meeting next week in Pittsburgh and, though city officials in Mattoon and Tuscola say political influences have been few so far, Sen. Dick Durbin, D-Ill., plans to meet with other members of the state's congressional delegation on Thursday to "plot our strategy."

"What we feel is the towns in Illinois have a lot going for them," Durbin told reporters on a conference call. "We just want to make sure we follow the rules and that the decision is based on science."

Landing among the final four candidates is not cause for celebration yet, Mattoon and Tuscola officials said. But even if his town is unsuccessful, just making the list draws attention both in and out of the state, Tuscola Mayor Dan Kleiss said.

"The city of Tuscola is getting on the world map," he said.

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AP Business Writer Steve Quinn contributed to this report from Dallas.

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