The European Commission has approved plans to grant around €10 million (£8m) of public investment to the operator of a gasification plant in Finland.
The Vaskiluodon Voima Oy facility will convert forest biomass into gas for electricity generation and district heating instead of using coal.
It will replace between 25% and 40% of the coal currently used to fuel the boiler.
In 2012, Finland notified plans to support the construction of a gasification plant in Vaasa and integrate it with an existing coal burning boiler.
EU Commissioner Margrethe Vestager said: “The investment in the Vaasa gasification plant will reduce our carbon dioxide footprint and dependence on imported coal.
“It shows how state aid rules can encourage sensible public spending targeted at reaching the EU’s environmental and energy policy goals.”