Power plant's waste to become fuel GREENHOUSE gas emissions from one of Australia's largest coal fired power stations will be used to produce biofuels as its owner attempts to reduce its carbon bill. Biofuel company Algae.Tec has signed a deal to establish a carbon capture and biofuels production facility next to the Bayswater Power station in the Hunter Valley. The agreement with the NSW government-owned power company Macquarie Generation means waste carbon dioxide from the power station will be fed into an algae growth system, which will then be used to produce biodiesel and jet fuel. Macquarie Generation CEO Russell Skelton said the move would reduce the company's carbon bill. "Carbon is now our single largest cost," he said. This technology should reduce our carbon output, reduce our carbon bill, and at the same time improve our bottom line. The price of carbon rose to $24.15 a tonne on Monday following an indexed rise in the federal government's carbon tax. Bayswater uses approximately 7.5 million tonnes of coal per year and delivers power to an area stretching from South Australia to North Queensland. New South Wales Energy Minister Chris Hartcher said the algae system would provide the Hunter Valley with a locally-produced green fuel source. This deal is an innovative means of capturing and reusing carbon emissions and providing the Hunter region with a locally produced green fuel source, Mr Hartcher said.