The factory is to be situated at Rya, on Hisingen, and is expected to cost 1.5 billion kronor, reports Göteborgs-Posten.
At the plant, tree branches and stumps will be burned and gas extracted. This will then be used as vehicle biofuel or for heating.
The project is still at the planning stage and it is not yet clear which technology will be used. Financing for the new plant is not yet in place, according to Göteborg Energi.