British Airways and the US bioenergy company Solena are to establish Europe's first green jet fuel plant in the East End of London.

When it is up and running in 2014, the factory will turn 500,000 tonnes of landfill waste - including household and industrial rubbish - into 16 million gallons of carbon-neutral aviation fuel every year.

It will produce enough fuel to power all of BA's flights from nearby City Airport twice over. And with 95% fewer emissions than traditional kerosene, the plan will be equivalent to taking 48,000 cars off the roads.

There are four sites under consideration for the plant, which will be built and run by Washington DC-based Solena, with BA guaranteed to buy all of its output. It will employ up to 1,200 people. Alongside the reduction in carbon from the jet fuel itself, it will also cut the methane produced from landfill and generate 20 megawatts of electricity per year as a byproduct.

Biofuel for aeroplanes has made slow progress, hampered by tricky technicalities including the necessary high energy capacity, and the extreme cold at which it must operate. BA's rival Virgin conducted the first commercial flight powered by biofuel in February 2008, and last January saw the first algae-fuelled jet take off from Houston.

But the fuel to be produced at Solena's east London plant will be altogether different. Rather than existing types that must be blended with normal fossil fuel jet fuel, Solena is aiming for a green fuel sufficient to fly the aircraft without any jet fuel added.

BA's chief executive, Willie Walsh, believes the scheme will help BA to meet its target to cut net carbon emissions by 50 per cent by 2050. "We believe it will lead to the production of a real sustainable alternative to jet kerosene," he said.

BA is adamant that the plant will be powered only by rubbish, and will not resort to using biomass crops grown specifically to be turned into fuel.