Greenhouse gas emissions from one of the largest coal fired power stations in Australia are to be used to produce biofuels as its owner attempts to reduce its carbon bill.
Biofuel company Algae.Tec has signed a deal to establish a carbon capture and biofuels production facility next to the Bayswater Power station in the Hunter Valley.
AAP reports the agreement with Macquarie Generation, a power company owned by the NSW state government, means waste carbon dioxide from the power station will be fed into an algae growth system, which will then be used to produce biodiesel and jet fuel.
Macquarie Generation chief executive Russell Skelton said the move would reduce the company's carbon bill.
"Carbon is now our single largest cost," he said. "This technology should reduce our carbon output, reduce our carbon bill, and at the same time improve our bottom line."
The price of carbon rose to $A24.15 per tonne on Monday following an indexed rise in the federal government's carbon tax.
AAP reports Bayswater uses approximately 7.5 million tonnes of coal per year and delivers power from South Australia to North Queensland.