The design of a compact environmentally acceptable carbon dioxide diluted coal-oxygen fired power plant is described. The plant releases no combustion products to the atmosphere. The oxygen for combustion is separated in an air liquefaction plant and the effluent nitrogen is available for use in oil well production. Recycle carbon dioxide mixed with oxygen replaces the nitrogen for the combustion of coal in the burners. The carbon dioxide produced is used in enhanced oil recovery operations and injected into spent wells and excavated salt cavities for long-term storage. The recovery of CO/sub 2/ from a coal-burning power plant by this method appears to have the lowest energy expenditure and the lowest byproduct cost compared to alternative removal and recovery processes.