Norway has approved a plan to connect Equinor's Hammerfest liquefied natural gas (LNG) plant to the national power grid in a bid to cut greenhouse gas emissions, despite local opposition, the government said on Tuesday.

The plan includes shutting down a gas power plant, Norway's largest single source of carbon dioxide, by 2040 and replacing it with power supply from the grid where renewable energy dominates.

"This is an important day for building industry and creating jobs in northern Norway, and for the climate," Norway's Prime Minister Jonas Gahr Stoere told a news conference in front of the LNG plant in Arctic Norway.

The plant's operator, Equinor, estimates the measure at Western Europe's largest LNG plant could save around 850,000 tonnes of CO2 emissions per year, or about 2% of Norway's total annual emissions.

(Reporting by Nerijus Adomaitis, editing by Gwladys Fouche)