PHG Energy has agreed to build a $2.25m biomass gasification waste-to-energy system in the city of Covington in Tennessee, US using its downdraft biomass gasification equipment and technology.

The waste-to-energy plant will use 12 tons of waste per day, primarily woody biomass, to produce heat that will be used for feedstock drying and the production of electricity simultaneously.

Speaking of the agreement city of Covington Mayor David Gordon said that it is a win-win situation for the city.

"It helps our environment and it helps our city financially," said Gordon.

Funds for the projects will be sourced from the Clean Tennessee Energy Grant, $250,000 and Tennessee Municipal Bond fund, $2m.

The biomass plant will reduce carbon emissions of 425 tons per annum.

Construction of the project is expected to begin in November 2012.