Coal gasifier technology has been developed in the United States, China, India and Russia.
It could be used to convert coal to liquid, liquefy it and convert it back into coal.
The technology is being developed in an attempt to cut coal use in the country.
Australia has more than 40 per cent of its coal-fired power plants.
Australia’s coal use rose from more than 30 million tonnes a year in 2013 to almost 40 million tonnes in 2020.
Coal is one of the world’s biggest fossil fuels, with about 30 per cent remaining in the ground.
The coal industry has faced pressure from environmentalists to reduce its use.
It has argued the technology could cut carbon emissions by 40 to 50 per cent, while potentially increasing the economy.
Last year, the Australian Competition and Consumer Commission (ACCC) announced it would consider regulating the coal gasification industry.