The Shuangjiangkou Dam, located on the Dadu River in southwestern Sichuan province, will be built over the next ten years by state power firm Guodian Group, costing around 24.68 billion yuan ($4.02 billion) in investment, according to the report.
The ministry said that while an environmental impact assessment had found that the project would have a negative impact on rare fish and flora, besides affecting protected local nature reserves, Guodian had pledged to take "counter-measures" to mitigate the effects.
On completion, the Shuangjiangkou Dam will dwarf the controversial Three Gorges Dam at 314m high to 185m, while having a total installed capacity of 20 gigawatts (GW), with annual power generation to exceed 7 billion kilowatt-hours (kWh).
The current highest man-made dam in China is the Xiaowan Dam on the Lancang River at 292m tall. Additionally, the Nurek dam in Tajikistan is the world's highest at 300m, though other taller dams are now under construction.
According to Reuters, Hydroelectric power is expected to make the largest contribution to China’s non-fossil fuel energy sources by 2020 – with the total share of renewable energy supply expected to go up to 15 percent from 9.4 percent in 2011.
But dam projects remain controversial in the country, after construction of the Three Gorges Dam from 1994 to 2005 flooded archaeological and cultural sites, while displacing some 1.3 million peoples and causing significant ecological changes, such as an increased risk of landslides.
The Dadu River is also the site of the second-deadliest landslide disaster on record, when the Kangding Louding earthquake caused a natural landslide dam in the river in 1786, before the dam broke, killing 100,000 people in the resultant flood.
The Chinese government said this year that hydropower capacity will reach 290 GW by 2015, up from 220 GW at the end of 2010. It also said it would begin building a controversial project on the undeveloped Nu River in Yunnan province.