UK Energy Minister Malcolm Wicks has opened a multi-million pound biomass unit at the European headquarters of Norbord near Stirling.
Energy Minister Malcolm Wicks opened the new plant
The company said the unit will be used to power its Cowie factory, cutting the level of emissions from the plant.
The unit will add to the one million metric tonnes of biomass used at the fibreboard plant each year, equivalent to two million barrels of oil.
Biomass is organic material that is burned, creating renewable energy.
The company said it had invested £2.5m in new environmental protection measures, including its new biomass plant.
Mr Wicks said Norbord was to be congratulated on the decision to use bio fuel.
He said: "Using biomass in this way will reduce carbon emissions and thereby play an important role in tackling climate change.
"The new plant at Cowie is a real success story, utilising waste wood and residues that would normally end up in landfill. The investment they have made, and commitment shown, is commendable."
Steve Roebuck, director of health, safety and environmental affairs at Norbord, said it was time biomass material was diverted from landfill sites.
He added: "At present there is a huge amount of available biomass currently going to landfill that is being ignored.
"Waste should only go to landfill after all recyclable parts have been recovered and then the rest burned to produce energy.
"This source should be used in preference to virgin biomass material, which should be used and then recycled, only being combusted for energy generation when it has reached the end of the recycling chain."
The biomass to be used in its factory will come from bark and wood residue in the manufacturing process with none being purchased from outside sources.