MATTOON, Ill. — Residents celebrated when this central Illinois city was chosen Tuesday as the site of a futuristic power plant that would burn coal without emitting global warming gases, then got to work figuring out what comes next.

The $1.8 billion plant known as FutureGen, which would store carbon dioxide underground, is expected to bring hundreds of jobs to Mattoon, a town of about 19,000 resident roughly 120 miles south of Chicago.

"I know this is the biggest economic development opportunity for east-central Illinois in decades, so Merry Christmas Mattoon," said Gov. Rod Blagojevich.

Hours after the announcement, the U.S. Department of Energy warned that projected cost overruns involving the plant "require a reassessment of FutureGen's design."

The FutureGen Alliance, a consortium of 12 U.S. and foreign energy companies, announced the site against the advice of the DOE, which had said it was not yet ready to sign off on the site.

"DOE believes that the public interest mandates that FutureGen deliver the greatest possible technological benefits in the most cost-efficient manner. This will require restructuring FutureGen to maximize the role of private sector innovation, facilitate the most productive public-private partnership, and prevent further cost escalation," James Slutz, the DOE's acting principal deputy assistant secretary, said Tuesday in a statement.

The project, three-fourths of which is taxpayer funded, has been under increasing scrutiny in Congress. Some lawmakers have questioned its soaring cost, nearly double the $950 million originally projected, and its long delays.

President Bush has touted FutureGen as key to developing carbon-free coal-burning power plants. It is supposed to be virtually pollution-free and produce electricity and hydrogen, while its carbon dioxide, a leading greenhouse gas, is to be captured and stored deep underground.

Officials have said the plant is expected to be operating by 2012.