North Yorkshire CC and City of York Council are to go ahead with an incinerator project that has been stalled for nine years.
Councillors have approved a financial package for the Allerton Waste Recovery Plant project, part of a 25-year contract between the councils and waste firm AmeyCespa.
The project began in 2005 but faced funding and legal difficulties before gaining approval from the councils in 2010.
It stalled in 2013 when the Department for the Environment, Food & Rural Affairs withdrew funding credits, arguing that the UK would have sufficient capacity to meet the targets of diverting waste from landfill without the project.
A report to a North Yorkshire council meeting said that, despite the loss of central government support, the project still offered a net benefit of £169m over the contract’s life.
The Allerton plant is intended to handle some 20,000 tonnes per year of waste that remains after recycling and composting, using an anaerobic digestion plant and an incinerator that could produce enough electricity to supply 40,000 homes.