Councillors in Cheshire are to appeal against the government decision to withdraw funding for a £850m waste-fuelled power station.
Both Cheshire West and Chester (CWAC) and Cheshire East councils had been on the verge of a deal to treat 180,000 tonnes of waste a year.
But £100m in support was cancelled as part of the Spending Review last week.
Wesley Fitzgerald, leader of Cheshire East, said the scheme was too important to accept the decision.
Mr Fitzgerald, the Conservative leader of the council, is seeking talks with the Department of Environment, Food and Rural Affairs (Defra).
He told the BBC that officials hoped the money could still be recovered.
"We would like to appeal this and with Cheshire West and Chester we will be making an appeal," he said.
"We feel this is too important to just lie back and accept what they have said."
The Cheshire project was one of seven identified by Defra that it felt were no longer needed to meet 2020 landfill targets set by the European Union.
The EU Landfill Directive set targets for each member state to reduce the amount of biodegradable municipal waste sent to landfill.
When the project was first mooted Cheshire's recycling rate was just 5%, but in the last five years it has risen to 53% of waste, Mr Fitzgerald said.
However the project, part of a plan to reduce the county's household waste over the next 25 years, remains essential, he added.
"The fact is people produce waste," said the council leader.
"We do recycle over half of that waste in Cheshire, but we are left with the residue, and we have to use that residue as best we can for the benefit of all, and that means turning it into energy."
The council had been down to the final two bidders for the joint contract - Resource Recovery Solutions, a joint venture between Interserve and United utilities, and Viridor.