Lancashire County Council has approved plans for a £40m energy plant in Fleetwood that will create electricity by burning commercial waste.
The scheme is a joint venture between Reform Energy and Wyre Waste Recycling who say it will generate enough power for 12,000 homes.
Preparatory work is expected to start on site early next year and it should be finished by 2013.
Reform says it is not an incinerator and will instead employ "sophisticated high efficiency combustion technology" that will "virtually eliminate emissions".
"The combined heat and power technology has been developed and used extensively in Europe to recover energy from material generated during the waste handling and recycling process," said the company.
Reform says the plant on Jameson Road will generate up to 10 megawatts of electricity using up to 80,000 tonnes of recovered waste material, and produce heat that can be supplied to local commercial or industrial operations.
The plans include a visitor centre and 'learning zone' aimed at giving the public and local schools the opportunity to learn about the process that recovers energy from waste, and how it fits with local and national policies on energy, waste and the environment.
Reform spokesman Chris Nelson said: "We are delighted with the decision of the councillors to give the go ahead for the plant, which demonstrates their understanding of the contribution that will be made by the plant to supplying sustainable green energy."