A new $380 million waste-to-energy facility planned for Kwinana will divert all of the area's residential waste from landfill.
In the first contract of its kind in Australia, the City of Kwinana and Phoenix Energy Australia have entered into a 20-year waste supply agreement for the proposed Kwinana Waste to Energy facility.
The city says it will achieve significant carbon emission reductions and produce the equivalent renewable energy to meet the needs of 15 per cent of its residents.
Kwinana mayor Carol Adams said the decision was historic.
"Not only will it result in significant long-term savings for our community, but it means we will achieve the Government's goal of zero waste to landfill, ensuring we made a positive change for our future generations," she said.
The project will be subject to an environmental approvals process and is scheduled to start construction at the end of next year and begin operating in 2016.
Phoenix Energy managing director Peter Dyson said there were already 1000 similar plants operating around the world.