Guessing (Austria) (AFP) - Broke, remote and deprived of jobs -- just 25 years ago, the border town of Guessing close to Hungary was one of the poorest in Austria, a forgotten frontier along the Iron Curtain trail.

Yet today, the municipality of 4,000 people has morphed into a global flagship model for green energy, after becoming the first community in the European Union to produce all its heat and power from renewable sources back in 2001.

Latest figures show the town is already 80 percent carbon neutral, a clear frontrunner in the bloc's race for reducing C02 emissions.

"The whole world should become Guessing," enthused Austria's most famous green advocate, Arnold Schwarzenegger, during a visit two years ago.

In many ways, it all began with a "pile of rotting wood", said engineer Reinhold Koch, one of the masterminds behind the dramatic transformation.

While Guessing lacked a motorway and train lines, there was one thing it had in abundance: forests and therefore timber leftovers from logging companies.

"A major reason why we were so poor in the early 1990s was because we spent millions on buying foreign fossil fuels, while wood offcuts were decaying on the ground," Koch told AFP in an interview ahead of crunch climate change talks in Paris.

"I realised that the solution was right in front of our eyes. We could produce our own energy and thereby keep the money here."

This, Koch hoped, would also put an end to the mass exodus Guessing was facing at the time.

Some 70 percent of the region's 27,000 inhabitants were forced to commute to the capital Vienna for work as a consequence of having been cut off from industrial development for several decades.

"I wanted to stop Guessing from dying," said Koch, matter-of-factly.

- Digging up the town -

The engineer found a willing ear in Guessing's then-mayor, Peter Vadasz, a conservative politician known for his environmental commitment. Together, the pair set about implementing an ambitious green transition plan.

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Firstly, all public buildings were thermally insulated and stopped using fossil fuels -- a move that would halve local government spending on energy.

Austria's EU accession in 1995 enabled Guessing to obtain subsidies and build a wood burning heating plant.

This proved a crucial first step toward reviving the region's stagnant economy, as Guessing was suddenly able to offer companies attractive deals.

"By producing our own energy, we decentralised power and brought it back to our region," said Vadasz. "My first question to potential new businesses was always: 'How many jobs can you create?'"

But the switch also meant adapting existing infrastructure and convincing locals to abandon fossil fuels.

Authorities began digging up the town's streets one by one.

"If 50 percent living on a street wanted to join, we would lay the pipes in the remaining homes too, in case they wanted to join later -- and they eventually did," recalled Vadasz.

"Green energy had a competitive market price and our best publicity was word-of-mouth, neighbours telling other neighbours that they weren't paying more."

- From zero to hero -

The real breakthrough, however, came in 2001 when Guessing launched a pioneering biomass plant with the help of Viennese scientist Hermann Hofbauer.

The expert had created a system able to produce power by turning wood into a clean gas instead of burning it, thereby strongly reducing CO2 emissions.

The innovative technology would not only achieve Guessing's dream of green autarky, but also propelled it to global fame.

"It can produce clean energy in any region in the world, as long as it has natural resources," explained Koch.

Today the giant metal construction, which also serves as a research facility, supplies nearly half of Guessing's heat, with the rest provided by other green sources.

Much of the biomass plant's wood comes from Austria's two largest parquet flooring firms which are among 50 new companies to have settled in Guessing in recent years -- despite there still not being a motorway or train lines.

The success story also had a knock-on effect, with some 20 power plants now producing renewable energy for the entire region.

"Experts call Guessing the mecca of renewable energy and say you have to make the pilgrimage at least once in your lifetime to see for yourself that this kind of thing is possible," said Koch, smiling.

Perhaps most importantly, the project has breathed new life into the town.

Where once lay crumbling homes, cafes and shops are now dotted around the historic centre as well as its 12th-century castle on the scenic banks of the Strembach river.

"We even have an international basketball team," said Koch, himself a former player, proudly pointing at a shelf of trophies in his office.

"People need heroes. The money made that possible."