Aberdeen City Council, Aberdeenshire Council and Moray Council have partnered to build an energy from waste plant.
The agreement will see the three authorities work together on the £150 million site which will help them comply with national regulations which come into force in 2021.
The Scottish Government has banned biodegradable municipal waste from going to landfill.
Construction is scheduled to start in January 2019 and a total of 200 workers will be employed.
Councillor David Aitchison, Chairman of Aberdeenshire Council’s Infrastructure Services Committee said: “With planning permission already approved for this new shared solution, these latest decisions are an important step forward.
“We can now move as partners to procure developers for the site, a milestone in a project which is potentially the solution to a problem we all face as a society, reducing our landfill of residual waste to zero by 2021.”