A new resource recovery plant at West Nowra will see 90 per cent of red bin waste recycled.
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The first sod was turned for the Bioelektra Australia Resource Recovery Facility (RRF) on Thursday, and is expected to be operational by late 2023.
The Shoalhaven facility at the tip site in West Nowra will be the first of its kind outside Poland and the third centre built in the world.
"The facility will use advanced processes to recover and recycle as much household waste from the red bin as possible," Shoalhaven Mayor Amanda Findley said.
"I am delighted to advise that Bioelektra Australia has received development consent for the Resource Recovery Facility from NSW Planning."
The new processing of red-lid bin waste is said to capture every recyclable material, including green waste.
A 'biomass' is produced from the food and green waste components, which will be used as an additive for brick manufacture and cement render.
The system will also separate plastics and remove all paint, labels and caps resulting in a less contaminated product. The technology sterilises waster in this process and has minimal odour due to absence of biological activity.
Shoalhaven City Council heralded the new facility as the solution to a mounting problem - if it continued to dump all household waste into landfill, a new tip site would have been required in 10 year's time.
However, this facility will extend the life of the West Nowra tip by decades, lasting another 50 years.
Cr John Wells said the sod turn marked the end of a "very long journey" and welcomed the "groundbreaking" technology to the Shoalhaven.
"In 1997, the NSW Government introduced legislation requiring waste operators and council's to introduce as a public health measure the recovery, recycling and reuse of waste materials," Cr Wells said.
"We've worked on a number of strategies over a long period of time ... and identified this groundbreaking European technology we are going to be introducing to Australia."
In 2018, Cr Wells and council staff visited Europe to inspect waste sorting facilities and reusable energy plants.
"We went to a factory in Poland, that's where this technology was developed and implemented," Cr Wells said.
"After that, we went to an energy-from-waste plant in Germany to look at how some countries use red bin waste as fuel to generate electricity."
The Shoalhaven's two-bin system will remain in place.
"We won't be introducing a third bin for green waste," Cr Wells said.
"Apart from that costing an extra $150 each per household, it would require the engagement from a third contractor to pick that waste up, another fleet of trucks, a larger carbon footprint."
The RRF will provide around 200 jobs during the construction phase and ongoing jobs for 34 people. The facility will be funded, built and operated by Bioelektra Australia.
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