A major new bio-fuel plant at Didcot Power Station has been launched.

The £3.5m facility will allow the station to burn up to 300,000 tonnes of carbon neutral bio-fuel a year - potentially cutting its carbon dioxide emissions by 700,000 tonnes.

The new plant mixes bio-fuels, predominantly sawdust and pine kernel expellent, with coal and will allow total bio-fuel use at the station to be increased to 10 per cent.

But last year the npower-owned station, named as one of the country's biggest carbon polluters, produced 63m tonnes of carbon dioxide and the shift to bio-fuel will reduce that overall figure by only one per cent.

Neil Sweeney, from npower's green fuel division, said the investment was worth the pay-off, both in environmental and financial terms.

He said: "It's only one per cent, but that is still 700,000 tonnes of CO2, which is a serious reduction."

He added: "If everyone could reduce by one per cent that would be a serious step forward."

He said the plant also played a part in the development of bio-fuel technology.

"It's only by getting schemes like this up and running we can show there's a market for bio-fuel and generate momentum," he said.

Mr Sweeney said depending on the life of the station, legislation and the bio-fuel market, the overall percentage of bio-fuel used could be increased in future.

But he added fuel sourcing was also an issue for the company.

Bio-fuels used at the station are currently brought in from around the UK and abroad, generating an additional 20 lorry deliveries per day.

Mr Sweeney said: "We're trying to reduce those distances and find the most efficient way of transporting it."

He added the long-tern aim was to source the bio-fuels locally.

The plant was officially opened by Wantage and Didcot MP Ed Vaizey at a special ceremony on Friday.

Mr Vaizey said: "Didcot Power Station is a great friend to Didcot.

"They make enormous efforts to be good neighbours and do their bit for the environment and this is the latest step forward."

Npower will also be carrying out 'clean coal' research at Didcot Power Station as part of plans to develop a new generation of coal-fired stations.