Pembrokeshire and Ceredigion County Councils have struck a new deal to process and export residual waste overseas.

The innovative approach will save each council more than £350,000 a year – and create 11 jobs at Pembroke Dock.

Under the new contract the two councils have signed with Potters Waste Management, waste from the two counties that cannot be recycled will be exported to Sweden.

There it will be used in a high efficiency power station to produce both electricity and heat for local Swedish households.

Councillor Huw George, Pembrokeshire’s Cabinet Member for Environmental and Regulatory Services said the new contract would be a massive benefit to the County.

“It will create jobs, make savings and ensure an environmentally improved alternative to landfill for the disposal of our black bag waste,” he said.

The new contract starts on March 1, with the first shipment expected to take place at the beginning of June.

Waste collected by the two counties will first be processed at sites at Pembroke Port and in Lampeter to remove certain recyclable materials.

It will then be shredded, baled and wrapped at Pembroke Port to create a Refuse Derived Fuel which can be shipped overseas.

The contract has been let under an innovative framework contract that Pembrokeshire and Ceredigion have created with advice from private sector partners, Eunomia.

Richard Brown, Pembrokeshire Head of Environment and Civil Contingencies, said the contract provided an opportunity for achieving cost savings for the County Council while also creating jobs and boosting recycling rates.

“It provides a flexible, low-risk, value-for-money approach that enables us to divert waste from landfill in the short term, but avoids committing too much waste to incineration in the long term as recycling rates escalate,” he said.

He added that using the excess capacity in Swedish incinerators allowed the waste to be disposed of cheaply, while the use of combined heat and power technology enabled far more energy to be extracted from the waste compared with most UK incinerators, making it both a green and economical solution.

Debbie Potter, Operations Director of Potters Waste Management said the company was delighted to have won the contract.

“This is a new venture for us and we are delighted to be working with Pembrokeshire and Ceredigion County Councils on this innovative scheme to make best user of waste, while also creating employment opportunities,” she said.

The contract takes place against a background of increased financial and performance pressure on local authorities over management of municipal waste.

Authorities face landfill tax of £80 per tonne, fines for any biodegradable waste that is landfilled above a set allowance.