The district heating scheme in Holborn, South Tyneside is expected to save 2,436 tonnes of carbon a year.
The £23million project would use a combination of technologies, harnessing heat from abandoned flooded mines, as well as from the River Tyne.
Solar panels, both floating and mounted on the façade of an energy centre, would generate electricity to power the heat pump.
Gas produced from wood and green waste would also be converted into 100% renewable fuel.
Although the overall scheme is still in the development phase, South Tyneside Council has been successful in attracting over £4million Government funding for enabling works, which include drilling of boreholes, construction of wells and testing of the minewater.
Planning permission has now been granted for initial work, which will get underway immediately.
Cllr Ernest Gibson, lead Member for Area Management and Community Safety, with responsibility for climate change, said: “This is our most ambitious renewable energy scheme yet, with the potential to cut our annual carbon emissions by 22%, as well as saving more than £800,000 a year.
“The heat network could initially serve not only council buildings in South Shields, but other public sector facilities including the police station, magistrates’ courts and a school.
“We’ve secured funding to carry out enabling works, which are starting immediately. This will involve boreholes being drilled to a depth of 280m and underground pumps being installed.
“As with the Viking Energy and Hebburn minewater schemes, this exciting project will capitalise on the area’s mining heritage and its natural resources.
“This scheme promises to be a major component in our drive towards carbon neutrality by 2030.”
Since then it has developed a comprehensive climate change strategy, backed by a five-year action plan.
In key priorities set out earlier this year, the council committed to investing in the natural and built environment.
Following the completion of Phase 1 and subject to funding and planning permission, the project will move into Phase 2, which will see the development of an energy centre and associated pipe distribution network.
The scheme is likely to combine a river source heat pump, a minewater heat pump, a combined heat and power (CHP) back-up system, solar panels, a private wire electrical network with storage battery and wood gasification plant.
Water source heat pumps work by extracting heat from a body of water, compressing it to increase the temperature and then converting it into useful energy in the form of hot water in a network of insulated pipes connecting buildings. The solar panels would provide much of the electricity to power the heat pump.
CHP would be used to complement the solar panels to produce carbon-free electricity to run the heat pumps. The unit would be fuelled by the gasification plant in a highly-efficient process that harnesses the heat that is a by-product of the electricity generation process and which would otherwise be wasted.