Infrastructure Minister Nichola Mallon has refused permission for the incinerator and waste management plant on the outskirts of North Belfast.
The plan by Arc21, an umbrella waste management group made up of several councils in the east of Northern Ireland, would have seen the construction of a facility in Mallusk, Co Antrim, capable of thermally treating 300,000 tonnes of waste per year.
The proposal had been not been without opposition, with the Department for Infrastructure receiving over 5,000 letters objecting to the planned facility in Newtownabbey.
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The department said that 168 letters of support were received.
Ms Mallon said that she had heard the concerns of locals. She added: "My priorities for this Assembly mandate were to improve lives, connect communities, grow a balanced economy and tackle the climate emergency.
"In respect of the latter, I am committed to climate action, and promoting recycling is an important aspect in that regard.
"This development could result in an increased market for waste disposal and to maintain a facility such as this, in addition to the other approved waste facilities, could discourage recycling.
"I am not persuaded that there is a need for this specific facility. In that context I do not consider there to be any need for this proposal."
The decision was welcomed by South Antrim Alliance MLA John Blair. He said: "It is the result of sustained pressure by the local community and cross-party opposition across South Antrim and North Belfast.
"That hard work, led by the NoArc21 group, has now prevented this proposal going ahead and my thanks go to all who played a part.
"While the technology may be acceptable, the location was not, given the inadequate local infrastructure and other issues."
A spokesperson for Arc21 said: "There is still a clear need to develop new, modern waste infrastructure for the one million people who live in the Arc21 region."
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