Climate change minister Phil Woolas has today launched a new £4m fund to support the installation of biomass fuelled heating and combined heat and power (CHP) systems, inviting applications for grants of up to £100,000 from companies, charities and public sector departments interested in deploying the technology.

The fund, entitled the Bio-energy Capital Grants Scheme, forms part of the government's Environmental Transformation Fund (ETF) and offers grants for up to 40 per cent of the difference in cost of installing a biomass boiler, CHP system or anaerobic digester compared with the installation of a fossil fuel alternative.

"As almost half of our CO2 emissions are the result of heating buildings or water or for industrial processes, switching our dependence on fossil fuels to more energy efficient equipment makes sense," said Woolas. "Funding to support the installation of biomass-fuelled heat boilers and combined heat and power plants can really make a difference and I invite all those who are eligible to apply."

According to a recent study from the Carbon Trust, micro CHP systems capable of capturing the waste heat from electricity generation to heat water or buildings can cut emissions by up to 20 per cent, while larger scale installations can deliver even more impressive costs and energy savings.

Defra said that a wide range of private and public sector organisations are eligible for the grants – which can run to a maximum of £100,000 per project – including both small and large businesses, factories, airports, hospitals and schools. There is a now a six week period for organisations to apply for a grant.