By 2020, 50% of the country's electricity generation should come from renewable sources, with an interim target set at 31%, according to government targets.

The Fife-based biomass project has been planned by Tullis Russell and Npower Cogen.

Malcolm Sinclair, Tullis Russell sales and marketing director, said: "All the planning for the CHP plant is now done and npower are currently working on the final contracts.

"We will be breaking ground in the next month or so and the construction period will create 300 jobs in the local area."

The £100m 45 mega watt biomass plant will use a combination of recycled and virgin wood as its main fuel and is scheduled to be up and running by early 2012.

Tullis Russell secured £8.1m in funding from the Scottish Executive through a regional selective assistance grant in July last year.

The plant will also reduce the 540-staffed paper manufacturer's annual fossil fuel carbon emissions by 250,000 tonnes.

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