Aucklanders' food scraps will be collected kerbside from 2021 and turned into biogas.
A 20-year partnership signed this afternoon between Auckland Council and Ecogas aims to reduce the 100,000 tonnes of food scraps sent to the landfill each year. The move is part of the council's goal of achieving a "zero waste" city by 2040.
"It's a big step forward for New Zealand," said Ecogas director Andrew Wood.
Starting in October 2021, Ecogas will process food scraps - currently making up around half the weight of Auckland's average rubbish bin - collected from the city's households and turn it into biogas and liquid bio-fertiliser.
Most Auckland households do not compost, and others put items difficult to compost at home such as meat and bones, according to Parul Sood, the waste solutions general manager at Auckland Council.
But Mr Wood said there was growing interest year-on-year and he expected a big uptake from Aucklanders.
Ecogas estimates diverting 60,000 tonnes of kerbside waste could produce enough renewable energy to power more than 1000 homes or enough biofuel to cover more than 3000 hectares of farmland.
In September, Ecogas - majority owned by sustainable power firm Pioneer Energy - was awarded $7 million from the government's Provincial Growth Fund, which it said it would use to fund a waste conversion plant in Reporoa. At the time, it said it saw potential for another 21 sites across New Zealand.
"Our door will be open and we will definitely be talking to other people," Mr Wood said.
Ecogas and Auckland Council did not disclose the value of the commercial arrangement, but Mr Wood said it was a "big investment".