John Doddrell, director of the sustainable energy policy unit of the Department of Trade and Industry, discussed the plans at a Euromoney conference in London in September.
The exemption would be "a first step", said Mr Doddrell, adding that the Government was looking at what other help might be possible.
David Cross, chief executive of Alkane Energy, said the move would be "a step in the right direction which will give companies encouragement to develop some of the more marginal sites". Alkane was already planning to develop more than 100 mines by 2006. This includes collaboration with Enron and Scottish and Southern on 15 sites over the next two years.
According to Mr Cross, the levy exemption would correct an anomaly. Until now burning mine gas in local industry was exempt from the levy, whereas electricity generation was not.
But Mr Cross cautioned that the exemption - worth 0.43p/kWh - is less than the fall in electricity prices over the last year.