The world's first industrial plant producing biofuels from seaweed will be built in the northeastern Brazilian state of Pernambuco in late 2013, the official in charge of the project said Thursday.

The factory to be set up by Austrian firm SAT on a sugar cane plantation that yields ethanol, will produce 1.2 million liters of algae-based biofuels annually, Rafael Bianchini, head of SAT's Brazilian subsidiary, told AFP.

The $9.8 million facility will make use of the carbon dioxide (CO2) emitted in the ethanol production to speed up the photosynthesis process in the seaweeds and thus reduce emissions of polluting gases into the environment, he said.

Bianchini said the goal was to "convert the CO2 from a passive to an active" state, making use of the strong CO2 emissions lost in the sugar cane ethanol production.

"For each ethanol liter produced, one kilogram of CO2 is released in the atmosphere. We are going to take this CO2 to feed our plant," he added.

Initially, the algae-based biofuel facility will use five percent of the emissions from the sugar cane ethanol process but later the proportion will be increased, Bianchini said.

The project has yet to be approved by Brazil's National Petroleum Agency.

Brazil is the world's second largest producer of biofuels after the United States.