"Norwegian industry is focusing more on renewable energy as the climate debate increases," he said.

NVE runs a government-sponsored programme to dole out economic support for the development of biofuel, heating pumps and waste water as a means of compensating for needed energy.

NVE, which supported 55 projects with 70 million Norwegian crowns in 1998, manages a pot of 75 million this year, Broli said.

Yet, Broli said most renewable energy projects operated with costs of around 35-40 oere per kilowatt hour (oere/kWh), whereas hydropower could be produced at a cost of around 15 oere/kWh.

The largest support from NVE in 1998 went to metal smelting plant Hafslund metall in Sarpsborg, which got 885 million crowns for a waste water conversion project at one of its plants.

Norway's centrist minority coalition this year proposed to grant 5.0 billion crowns over the next 10 years to renewable energy. Additionally, investments in renewable energy from January 1, 1999 were free from investment tax.

Egil Evensen, chairman of Norwegian utility Trondheim Energiverk (TEV), said he expects a government subsidy of around 20 to 30 percent on a 15 million crown investment to develop the country's largest biofuel plant for district heating in Trondheim.

"It is a strategy within our district heating system to use more bioenergy. There is, of course, a political wish to increase bioenergy production," he said.

TEV, along with Norwegian state railroad unit NSB Eiendom, plan to start production at the plant by November 2000.

Evensen said the new plant will have an annual production capacity of 30-gigawatt hours.

He said annual carbon-dioxide (C02) emissions would be slashed by around 10,000 tonnes by replacing virtually all current oil-based heating used by TEV and NSB with biofuel.