The Lancashire town of Leyland is hardly a monument to cutting-edge technology. It is best remembered for the car plant that became a symbol to the industrial turmoil that plagued Britain in the 1970s. Perhaps that's why the locals were none too impressed to hear, a few months back, that their locality had been earmarked for a plant where all Lancashire's domestic waste would soon be processed. The county produces 775,000 tons of the stuff a year, so it certainly sounded as if Leyland was being dumped on from a great height in return for a few badly needed jobs.

But when Greenpeace celebrates the kind of technology that is to be used on the county's rubbish in a report on "cool waste", and Friends of the Earth positively purrs about the prospect of the plant (which, despite the protests, has just been approved by Lancashire County Council) then something must be afoot.

The environmentalists are interested because the Lancashire plant's operator is Global Renewables Limited (GRL). The firm is a subsidiary of an old Australian mining company that decided several years ago to investigate whether the techniques it was using to extract diamonds, gold and tin from the earth could be applied to remove recyclable commodities from the mountains of waste that were dotted across its vast nation. (When it comes to rubbish, the Australians are in a field of their own. Only the US throws out more household waste than Australia. The colossal garbage tip south of Sydney, which is 50m high, provides a more spectacular view than even the Sydney Harbour Bridge.)

The Australians found that where there was muck, there was, indeed, brass. Working on the age-old mining principle that the more reusable materials it could separate out, the more profit it could make, it built the southern hemisphere's largest waste facility - Eastern Creek - where it recycles virtually all of the waste it receives and - here's the groundbreaking bit - incinerates none of it. It is considered by many environmentalists to be the first firm to view waste as a mineable resource rather than something to be destroyed.

This is the kind of technology that counties and cities the length and breadth of Britain desperately need. All the recent talk on recycling has been focused on stepping up our kerbside recycling efforts (we recycle or compost 23 per cent of our waste compared to 53 per cent in Germany and 70 per cent in Flanders, Belgium). But what about the 77 per cent of material that we cannot recycle ourselves? So much of it still goes to Britain's 1,986 methane-emitting landfill sites, which are filling up fast, that Britain looks unlikely to meet limits set by the EU that will hit us 2010. To bring the country into line, the Government has announced that councils are to be fined £150 per ton if they exceed pre-agreed targets from 2010 and that, along with the offer of Private Finance Initiative cash to build facilities to replace landfill, has started a mad scramble among the councils.

If your local council has not already signed up to some kind of PFI-funded facility then it soon will, and most of those to date involve incinerating waste. If the initials MBT (mechanical biological treatment) accompany your council's plans, then it's good news, according to many environmentalists. It means your local plant has the technology to separate out recylables from the rubbish inside your binliners, and incinerate a fraction of it.

But many others work on different technology, through which the waste is incinerated and heat and/or electricity captured. Advocates of these Energy from Waste (EfW) schemes, which involve burning waste to generate electricity and hot water, argue they are the best option. But any kind of incineration is environmentally disastrous, according to Greenpeace and FoE. FoE has commissioned research that shows that some incinerators emit 33 per cent more carbon dioxide than gas-fired power stations.

There is also a fear that firms which incinerate the waste are less interested in driving up kerbside recycling, as they need a minimum of calorific rubbish such as plastic and paper to operate. Hence the green lobby's interest in GRL, which has established a UK corporate base at Salford Quays, Greater Manchester, from which to bid for UK contracts like Lancashire's.

In its search for profit, the firm has commandeered the best mechanical mining devices to extract recyclable contents from inside binbags: giant magnets remove metals; the plastic film that covers magazines and newspapers is literally "blown" out of waste heaps by heavy-duty cyclone machines; a giant vibrating conveyor belt separates out small pieces of glass. In some cases, the UK markets for some of these products is still to be established. For instance, GRL is investigating who might have a use for recycled plastic film, which the Japanese and Swiss convert to biodiesel.

Once GRL's initial sorting process is complete, the really sophisticated technology begins. Warm water is fed into the waste mass through a network of underground pipes, creating a chemical process that results in a highly acidic liquid being produced. This is the stuff which, in the bad old days, used to leak from tips into groundwater, but within GRL's system it can accelerate the decomposition of the waste. The pipes also collect biogas (methane and carbon dioxide), generated by rotting organic matter, some of which is used to power the plant.

After several days, the waste has decomposed into another vital, sellable asset: compost, or OGM (organic growth media) as GRL calls it. Rules governing the use of compost made from waste mean that it cannot be spread around fruit and vegetables in this country but can be used to remediate colliery spoils, former industrial sites, landfills and quarries. In Sydney, where GRL processes 11 per cent of the rubbish, the firm sells back 30,000 tons of organic compost a year. After the composting, GRL will still be left with a small volume of Lancashire's waste - up to 15 per cent of the original volume - which can't be used as compost and will be returned as stablised, non-methane-emitting landfill.

David Singh, GRL's development director, believes that the technology is more likely to be called on in areas, like Sydney, where large volumes of waste can be collected within a reasonable travelling distance of the plant. "We came to the waste business from mining background, which means we treat it as an asset to extract something from rather than something to dispose of," he says.

Dr Michael Warhurst, FoE's waste specialist, believes the technology should be considered everywhere. "London and the South-east need just as much compost - if not more - for remediating land. The alternative to this is incineration, which is simply putting more fossil fuels into the atmosphere. In our dash to find an alternative to landfill, many parts of Britain are jumping for a solution that simply brings another form of environmental destruction. If there are alternatives, we should at least look at them."

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