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Biomass-fuelled heating and combined heat and power (CHP) projects can now bid for a share of £12m in funding following the launch of the latest round of the bio-energy capital grants scheme.

Initiatives can access grants of up to £500 000, which can be used to cover up to 40% of the difference in cost between a biomass boiler and its fossil fuel alternative.

Schools and hospitals are among the community organisations which can bid for funds, alongside commercial operations such as shops, pubs and offices.

Sustainable development and energy innovation minister Lord Hunt of Kings Heath, said: “Nearly half of the UK's carbon emissions come from heating, so it's essential to change how we heat businesses, hospitals, schools and community buildings.

Lord Hunt continued: “By using biomass fuel to generate their own energy instead of coal, oil or gas, organisations can reduce their carbon impact and take an active role in the fight against climate change.

"We've also recently introduced new legislation which will mean people who do generate their own heat or electricity will be financially rewarded for doing so."

Through previous rounds of the bio-energy capital grant scheme a total of £55 million has been allocated to help set up biomass power stations, biomass-fuelled CHP plants and biomass heating systems.