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Waste coffee grounds collected from the capital’s cafes will be used to heat the equivalent of thousands of Londoners’ homes by the end of the year.

The service, launched on Friday, is run by Southwark-based start-up Bio-bean, winners of Boris Johnson’s inaugural low carbon entrepreneur award.

As of today, a van is being driven around 100 central London cafes daily to collect waste coffee, which is then taken to a processing plant just north of the capital and processed into pellets.

Although only a couple of hundred tonnes will be collected each week at first, Bio-bean spokesman Daniel Crockett expects the firm to be processing the equivalent of 50,000 tonnes a year by 2016.

“We wanted to build it inside London,” Mr Crockett told the Standard, “but we aren’t at that stage yet.

“We’re collecting from cafes, office blocks and transport hubs – we’re filling up the Monopoly board!”

While Bio-bean does not pay the coffee shops - which include cafes in big-name firms and all seven of London's biggest rail stations - its collection service saves them coughing up potentially costly landfill fees.

At peak production, the Southwark business will be producing enough pellets to heat 15,000 homes. The pellets will be burnt in efficient biomass boilers to produce energy.

The Mayor of London launched the collection round on Friday at a coffee shop in Clerkenwell – and took the opportunity to appeal for entries to this year’s awards.

Mr Johnson said: “Our green economy is booming and I want the next generation of low-carbon entrepreneurs to help make London the greenest, most sustainable innovative city on earth.

“The roaring success of previous winners like Bio-bean demonstrates the huge market for green technology ideas. They’ve done the hard grind and Londoners can now enjoy their daily coffee fix in the safe knowledge that as well as their own caffeine kick the energy levels of as many as 15,000 homes are being boosted.”

As well as turning the grounds into pellets, Bio-bean is looking into extracting high-value chemicals and even fuel from waste coffee, which is typically up to 20 per cent oil.