The Inter-American Development Bank (IDB) approved a loan of 6.5 million U.S. dollars on Friday to build a 15.6-megawatt biomass power plant in Chile.
The plant, which will use agricultural, forestry and industrial waste as fuel, would have almost zero carbon dioxide emissions and thus meet the strict international environmental standards, the IDB said.
The plant will be located near a paper manufacturer, Compania Papelera del Pacifico (CPP), some 60 km south of the capital Santiago.
The CPP will purchase almost half of the electricity and all of the steam produced by the plant. It is expected to start going into operation by the end of 2010.
Two other companies, Coipsa and Tirsa, will supply the biomass for the new plant, buying waste from vineyards, sawmills and packing plants in the
surrounding region.
"Promoting renewable energies and competitiveness of the Latin American companies are top priorities for the IDB," said Jaime Sujoy, IDB representative in Chile.
Through a grant of technical cooperation from the IDB Sustainable Energy and Climate Change Initiative, the project will also seek to obtain
bonuses for low carbon from the United Nations Clean Development Mechanism.