A co-investment of $23 million from the territory and federal governments, through the Australian government's Recycling Modernisation Fund, will see a new major recycling facility built at Hume, rather than replacing the ACT government's existing facility.

Federal Environment Minister Tanya Plibersek said the benefits of this investment would be manifold for Canberrans.

"The result is more local jobs to support recycling and remanufacturing, financial savings on raw materials, reduced emissions from energy to extract virgin resources and transport waste, and less material going to landfill," Minister Plibersek said.

"To power the ACT's circular economy, we need cutting edge waste management and recycling facilities."

The new organics facility, which is to receive $13 million of federal funds, will process up to 50,000 tonnes of local organic waste per annum.

The funding boost is part of the Albanese government's goal to halve the amount of organic waste sent to landfill nationally by 2030.

The territory government launched a trial of the organic waste program in Belconnen last year, offering a small bench-top bin to collect food scraps in the house and a weekly kerb-side organics bin collection.

"We expect the fund to help divert up to 3.4 million tonnes of food and organic waste from landfill nationally and put it to productive use on our agricultural soils as compost and soil improvers," Minister Plibersek said.

"If we can reach our national target of recovering 80% of Australia's organic waste, we will generate $401 million in value-add to the Australian economy, support up to 2,700 additional jobs in the organics recycling industry, and avoid over 2 million tonnes of greenhouse gas emissions."

"That's the same as taking nearly half a million cars off the road or planting more than 23.1 million trees," Minister Plibersek said.

ACT Minister City Services Chris Steel welcomed funding for the new facilities.

"Large scale composting infrastructure is essential to enable FOGO collections to be expanded to every household in the ACT," Minister Steel said.

"Once built, Canberrans' food and garden waste will be collected in their green bin and recycled into nutrient-rich compost, cutting waste emissions by up to 30 percent."

Mr Steel said the territory's plans to construct a new materials recovery facility in partnership with the federal government would "improve safety and avoid the need to close the existing [facility] during construction".

"New technology at the new plant will deliver the capacity to sort, separate, and process materials for the whole Canberra region, creating higher quality resources with higher value uses including remanufacturing," he said.

The ACT government will put tenders out to design, construct, maintain and operate the two new facilities later in 2022.

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