ScottishPower in running for clean coal deal
The companies are competing with RWE npower for funding support to develop technology that will capture dangerous greenhouse gas emissions that will be stored under the sea.
E.ON chief executive Paul Golby has expressed frustration at government delays in allowing his company to build a coal-fired station at Kingsnorth in Kent.
He has now indicated that "weak signals" from the government towards supporting low-carbon technologies may force the company to talk to other countries.
"It is vague at the moment," Golby told an energy industry gathering.
"If we can't develop the technology at the right pace in the UK we'll look elsewhere to develop it. We're talking to the Dutch government about support there, as well as Germany."
Golby's admission will encourage ScottishPower and RWE npower ahead of a decision next year on which company has secured the lucrative contract.
The technology will allow power stations to continue producing electricity while vastly reducing their impact on the environment. The carbon dioxide is then stored under the sea.
Industry experts claim the carbon capture and storage (CCS) technology could replicate an industry on the scale of North Sea oil, creating thousands of jobs.
ScottishPower has teamed up with Shell and some regard it as a leading contender because it already has a coal-fired power station at Longannet in Fife where it recently switched on a prototype unit.
While it is small and limited in scope it is expected to help scientists learn more about the technology.
The company has indicated previously that it could have a much larger plant ready for 2014. Golby has said it will be 2016 before E.ON could complete construction.
At the switch-on at Longannet in May, Nick Horler, chief executive of ScottishPower, said it was the first time CCS technology had become operational at a UK coal-fired power station.
He described it as a major step forward in delivering carbon-free fossil fuel electricity generation.
The industry is keen to show that the technology can be retro-fitted to existing plant. If so, 50,000 plants around the world could be adapted.
Industry experts reckon the carbon capture sector could create 50,000 jobs in the UK alone, with many of those coming to Scotland if ScottishPower secured the funding.
David Hunter, an energy analyst at McKinnon & Clarke, has said that Scotland is in a prime position to lead the world in carbon capture because it has the infrastructure, the technological know-how and the space to store carbon in disused oil fuels and deep beneath the North Sea.
If fully deployed it is thought carbon capture technology could eventually lead to 90 per cent of greenhouse gas emissions being captured from power stations.