Balcas is one of the UK's most advanced wood processing firms

It is being built by timber processing firm Balcas at its plant outside Enniskillen, County Fermanagh.

It will make high energy wood pellets from surplus sawdust and woodchips.

The �9m plant will produce 50,000 tonnes of fuel pellets a year, enough to meet the company's own energy requirements and power 10,000 homes.

The pellets can be burned in industrial and domestic heating boilers without creating a net increase in carbon dioxide, which causes global warming.

The firm said the on-site processing of sawdust and wood chips would eliminate 10,000 heavy truck journeys each year from the roads of Northern Ireland - equivalent to 1.5 million truck miles.

Timber is a cheap and renewable resource and the bio fuel pellets industry provides a bonus of well-paid rural jobs in harvesting, production and distribution Ernest Kidney Balcas

Balcas managing director Ernest Kidney said the opportunity had come about because company productivity had increased by about 40%, leading to a huge surplus of sawdust and woodchips.

"Inside the next decade, bio fuel pellets could deliver the energy for a quarter of new rural homes in Northern Ireland," he said.

"Bio fuel pellets can provide the energy needs of communities where the hinterland precludes wind generation, where the topography is hostile to overhead and underground cabling and where the fuel itself grows from the hillside to the roadside.

"Throughout Europe, timber based bio fuel pellets already provide heat, power, and price stability.

"Timber is a cheap and renewable resource and the bio fuel pellets industry provides a bonus of well-paid rural jobs in harvesting, production and distribution."

'Renewable forests'

The project is being supported by �2m from the Department of Trade and Industry in London and a �1m interest free loan from the NIE SMART programme.

Stephen Timms said finding new sources of energy was a challenge

Balcas is one of the UK's most advanced wood processing companies, with seven manufacturing and processing sites in Ireland, Britain and Europe.

The company employs 1,000 people in harvesting and processing the output from the renewable forests of Northern Europe.

Trade and Industry Energy Minister, Stephen Timms said: "Finding new sources of energy and integrating them into our lives are some of the most important challenges we face in coming decades.

"Balcas is making a significant contribution to meeting these challenges by developing the UK's largest bio fuel pellet plant here in Fermanagh."