Proposals are being considered for a combined heat and power biomass plant which burns wood fibre and provides both heat, in the form of hot water and steam, and electricity to the national grid.
The Council says the development would provide 90% of the paper mill's heat requirements and save more than 80,000 tonnes of carbon dioxide annually.
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In her report to the committee, head of planning and sustainable development Dr Margaret Bochel states: "The plant would help ensure the future of the paper mill by reliably supplying energy at a less volatile price and also, importantly, helping the mill reduce its carbon emissions.
"In addition, the plant would help provide a new market within the forestry industry in the region by using wood for which there is currently no market. One effect of this is that the woodlands would be better managed.
"Economic development of the paper mill and within the forestry industry, both of which would contribute towards providing a diversity to the economic base of the city and region, is an important and significant factor in favour of the application proposal."
Members of the Development Management Sub-committee are to consider a planning application for the plant at a meeting in the Town House on Thursday 17 January.
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