The EIB will provide £150m for the facility while the GIB will invest £33m in the project.
Planned to be constructed at Allerton Park, near Knaresborough, the facility will treat household waste from North Yorkshire and the City of York.
The project will feature a mechanical pre-treatment facility to recover metal, paper and plastics for recycling, an anaerobic digestion facility to treat organic waste and produce about 6GWh of renewable energy a year.
Upon completion, the facility is expected to process about 320,000 tons of household, commercial and industrial waste per year.
The facility will generate 203GWh of energy per year, enough for more than 40,000 households in the region.
It will divert over 7 million tons of waste from landfill and recover more than 1.5 million tons of recyclable materials.
The project is being developed by North Yorkshire County Council and City of York Council along with AmeyCespa, Aberdeen UK Infrastructure Partners and Equitix.
Construction of the facility is anticipated to start in December 2014 with operations planned for 2018.
EIB vice president Jonathan Taylor said: "The European Investment Bank is committed to supporting investment in waste processing that reduces carbon emissions, uses waste to generate green electricity and lowers long-term costs for households.
"We are pleased to support construction of the new Allerton Waste Recovery Park that will use innovative technologies to reduce the cost of waste management for local authorities, increase recycling and recover energy from waste."
UK Green Investment Bank chief executive Shaun Kingsbury said: "This innovative project is a best-in-class example of how local authorities can improve recycling and generate significant amounts of renewable power from household waste."
Image: The new waste treatment facility will be constructed at Allerton Park, near Knaresborough. Photo: Courtesy of UK Green Investment Bank.
