Bord na Móna has been given permission to continue operating a power plant in Edenderry, Co Offaly until 2023.
The semi-state company was originally given clearance by An Bord Pleanala to continue using the plant, which burns peat and biomass, last year.
However, heritage group An Taisce challenged the decision in the High Court in October 2015 and secured a court order in overturning the decision.
An Taisce argued that the environmental impact of peat harvesting for use as a fuel source was not properly assessed in line with an EU Environmental Impact Assessment Directive.
A stay on the ruling was granted until April 2016, with the High Court granting a final stay in October this year.
If An Bord Pleanala had not granted new planning permission by the end of 2016, the plant in Clonbollogue would have had to have been decommissioned by February.
Siptu warned that the closure of the plant, which provides about 2.5 per cent of the State’s annual power needs, would lead to the loss of almost 300 jobs.
Bord na Móna welcomed the decision and said it aimed to cease production of peat for electricity generation by 2030. This approach would allow the company to maintain significant employment in the midlands while also becoming more environmentally and financially sustainable, it added.
Ian Lumley of An Taisce said An Bord Pleanála’s “unfortunate” decision failed to show how it assessed the environmental impact of peat extraction.
It was “irreconcilable” with meeting the State’s EU emissions targets and reductions expected under the Paris climate change agreement.
“Burning peat produces more CO2 than coal and has the secondary effect of digging up the most significant store of greenhouse gases in the country.”
Tony Lowes, of the Friends of the Irish Environment, said there was “legal chaos” when it came to the laws governing industrial peat extraction. He urged the Government to finalise new legislation around the practise.