Australian bio-fuel company Algae.Tec has forged an agreement New South Wales state-run power company Macquarie Generation to develop a bio-fuel facility near 2640MW coal-fired power plant in the Hunter Valley.

The company intends to feed its facility with waste carbon dioxide into the enclosed algae growth system to produce algal oil, which will be converted to biodiesel and hydrogenated to grade A jet fuel.

Commenting on the alliance, Macquarie Generation CEO and managing director Russell Skelton said that the partnership with Algae reflects company’s creative ways to further the growth of its business, besides improving environmental performance.

"It’s new technology improving a traditional power plant," added Skelton.

"Carbon is now our single largest cost. This technology should reduce our carbon output, reduce our carbon bill, and at the same time improve our bottom line."

NSW Energy Minister, Chris Hartcher noted: "This deal is an innovative means of capturing and reusing carbon emissions and providing the Hunter region with a locally produced green fuel source."

Algae.Tec executive chairman Roger Stroud added: "At a time when all the petroleum refining capacity is closing down in NSW, this is the beginning of an era of renewable fuel which can be ‘grown’ in the State and can substitute imported petroleum products."