AMSTERDAM, Jan 24 (Reuters) - The Dutch High Court gave the green light on Wednesday to the construction of a 50-megawatt power plant based on palm oil, whose sustainability was challenged by environmental organisations.

The court rejected claims that the plant was not based on modern technology and did not lead to reduction in greenhouse gas emissions, blamed for global warming.

Global production of biofuels -- made from sugars, grains and edible oils -- and power produced from biomass have soared as countries look for alternatives to fossil fuels to fight climate change and solve energy security problems.

But environmentalists say burning tropical forests to produce palm oil or sugar would more than offset the environmental benefits.

Dutch BioX Group, which is developing a number of renewable energy power plants in Europe, plans to build the plant on the site of aluminium producer Aldel owned by Anglo-Dutch steel group Corus and run it on Asian palm oil by-products.

BioX received environmental permit for the plant in February last year but a number of Dutch environmental organisations challenged the document before the High Court, raising concerns about palm oil sustainability as an energy source.

"The court did not rule on that as the permit itself requires that we use sustainable palm oil," BioX sustainability manager Arjen Brinkmann said.

"We will make sure that we guarantee the usage of such palm oil. We have no doubt that we can source it and prove its origin," he added.

Dutch State Secretary of Environment Pieter van Geel told Reuters last week that palm oil was likely to be excluded from future government subsidy plans to boost renewable energy because of environmental concerns.

BioX chief financial officer Edgare Kerkwijk said his company was working only with Asian companies which could guarantee the sustainability of their palm products.

BioX has plans to build another 50 MW palm oil-based power plant in the Netherlands, which is also challenged in court, and works on similar projects in Italy, Belgium and Britain, Kerkwijk said.

Aluminium smelter Aldel will be the sole cosumer of the electricity produced by BioX's first Dutch plant, expected to become operational in 2008.

Aldel and other Dutch power intensive-companies, suffering from a sharp rise in power prices in the last two years, said they were looking to sign long-term supply contracts or have their own power plants to offset unexpected jumps in prices.