Construction of a large bio-refinery in Carlow - which would produce 300 million litres of bioethanol a year - could start later this year.

The proposal by Sustainable Industries Ireland is expected to cost €200m and would employ 200 people in production.

Planning for the bio-refinery is said to be at an advanced stage. It will be able to convert agricultural products including beet, oats and wheat into bioethanol - a substitute for petrol. The plant would also make livestock feed, fertiliser and chemical compounds.

A second aspect of the development would involved the creation of biogas from farming, sewerage and municipal waste to produce electrical power.

The company is also investigating a horticulture project to use waste heat and carbon monoxide to produce food greenhouse products such as tomatoes and berries.

The company is negotiating the purchase of sites in County Carlow and at Belview Port near Waterford, where products for the industry could be imported and exported.