Veolia Environmental Services has been given planning permission by Leeds City Council for an energy from waste plant.
The 11MW facility will be located in Cross Green in the city, and is expected to save £200 million for the council over the length of the 25-year contract.
Leeds City Council executive member for environment Councillor Mark Dobson said: “This decision has been years in the making and the level of scrutiny provided by panel members demonstrates just how important the incinerator is to the city.
“I’ve said frequently that we can’t afford to continue to bury waste in the ground on financial or environmental grounds.
“Alongside other improvements to our waste services, this is a significant milestone in enabling us to recycle as much as we can.
“With the final discussions set to get underway, we’re confident the end result will be a facility that will allow us to realise our ambitions for a cleaner, greener Leeds.”
Veolia Environmental Services executive director Robert Hunt said: “This is a major step forward in delivering a long term waste management solution for Leeds. We firmly believe that the proposed facility at Cross Green offers the right location and the right technology for the city.
“Our primary aim is to minimise the amount of waste sent to landfill – a response to both cost and environmental pressures.
“The construction and operation of a single well-located facility offers the best financial and environmental solution for the local authority and the local taxpayer.”