The Environmental Protection Authority has given conditional approval to a $3.5b coal-fired urea plant, near Collie.

Indian investor Vikas Rambal's company, Perdaman, announced plans in early 2009 to build the coal-fuelled urea plant, which is expected to create an extra 1500 jobs in the South-West mining town during its construction andgenerate $850 million a year when it begins working in November 2013.

EPA chairman Paul Vogel said the plant would be a major emitter of greenhouse gases.

"With the continued uncertainty over a Commonwealth carbon market, the EPA has recommended greenhouse gas abatement conditions addressing carbon capture and storage," he said.

"Black cockatoo nesting trees which are removed during construction are recommended to be replaced with artificial nesting boxes on a six-for-one basis."

The EPA's recommendations will now be sent to Environment Minister Donna Faragher for a final decision.