Edenderry Power Ltd has been given permission by An Bord Pleanála to burn meat and bonemeal from the rendered down remains of animals to generate electricity at the Co Offaly plant.
Its plan to burn the rendered down animals with a mixture of biomass had been strenuously opposed by local residents represented by the Offaly and Kildare Anti-Incinerator Group.
Yesterday's decision is likely to be appealed.
Welcoming the decision, Dermot Kelly, general manager of Edenderry Power, said the company has always considered that the co-fuelling proposal had considerable merit.
He said he was delighted that, following a lengthy period of detailed assessment of all the issues involved, An Bord Pleanála decided to uphold the strong decision made by Offaly County Council in favour of the planning application.
"In making the decision, An Bord Pleanála concurred with the local authority's assessment that the proposal would not seriously injure the amenities of the area and would not be prejudicial to public health," said a statement issued through the company's public relations company.
Mr Kelly indicated that the decision presented Edenderry Power with a number of options for reducing emissions of carbon dioxide (CO2), the key greenhouse gas believed to be responsible for climate change.
Edenderry Power currently has a cap on permitted CO2 emissions from the plant, imposed as part of the National Allocation Plan required under the EU-wide emissions trading scheme.
It is forced to buy CO2 emissions allowances on the open market at a price of almost €30 per tonne.
"The co-fuelling proposal will allow Edenderry Power to reduce emissions of CO2 and thereby reduce the requirement to purchase emissions allowances on the market, thus providing savings to the electricity consumer as well as benefiting the environment," said the statement.
The statement added that the company was delighted that this phase of the planning process was complete and that, following due consideration of the proposal, the competent authorities have upheld the county council's decision.