Rotorua's long-awaited Terax project could be up and running by the end of next year and could save the council millions of dollars.
Terax, formerly known as "Waste to Gold", is a joint partnership between the Rotorua Lakes Council and Rotorua's Crown Research Institute Scion.
It is designed to efficiently treat and recycle bio-solid waste from the city's wastewater treatment plant.
Rotorua Lakes Council Terax plant project manager Peter Dine said to date the council had spent nearly $1.8m on the project with a further $9 million budgeted in the council's Long Term Plan.
The council is also expecting a $3.8 million contribution from the Ministry for the Environment.
The Terax pilot plant, a smaller version of the final design, is already in operation at the waste water treatment plant.
Mr Dine said Terax remained the most cost-effective option for achieving the council's objectives around sustainable disposal of sludge from the city's wastewater treatment plant and for achieving compliance with stringent new environmental protection requirements.
"Following more detailed design work, operational cost savings are now expected to be even higher than originally predicted," he said.
According to previous reports, Terax "could save the council about $4m a year, remove about 8500 tonnes of sewage sludge from the landfill each year and extend the life of the Atiamuri landfill by up to 20 years".
However, Mr Dine said that was a "possible future scenario that would require a second plant treating the district's entire waste stream - both public and private waste currently going to landfill.
"It's a potential long-term future development, but would probably need a public/private partnership arrangement.
"Carbon products produced by the Terax plant offset current costs of purchasing ethanol.
"The Terax project has been subject to a rigorous design process and where necessary, performance is being tested with the pilot plant or laboratory scale testing.
"To date the plant's performance has been demonstrated to meet all parameters set out in the basis of design."