"We think there's going to be a very significant demand for the fuel," said Waste Management spokesman Kent Stoddard.

The initiative will also allow Waste Management, which already operates the largest US fleet of heavy-duty collection trucks that operate on natural gas, to reduce its dependence on fossil fuels.

"It couldn't come at a better time since oil and gas prices are going through the roof," said Waste Management spokesman Wes Muir.

Waste Management has partnered with the North American unit of engineering company Linde Group to build a liquefied natural gas facility near Livermore, California. The facility will produce clean fuel from the gas produced from decomposing organic garbage. The fuel will then be used to power about 300 Waste Management collection trucks.

The facility is expected to begin operating in 2009.

The plan will cost about $15.5 million, with $1.4 million reaped from grants and the remainder split between Waste Management and Linde, Muir said, adding that Linde will operate the facility.

Muir declined to specify the companies' expectations for the impact on profits, saying only that "it's going to save us some money, but primarily it's going to reduce emissions."

The gas produced by the Altamont facility will be the cleanest burning fuel available for the company's collection trucks, he said.

California has adopted a landmark law to reduce carbon dioxide and other greenhouse gas emissions by 25 percent by 2020 and it's expected that other states will follow.

There are two other facilities that can make natural gas from waste, one in Orange County, California, and one in London. But their output falls short of the 13,000 gallons of fuel the Altamont Landfill is expected to produce annually, according to Muir.

The liquid natural gas project will help Waste Management meet its goals to cut total fleet emissions by at least 15 percent.

Muir said the initiative will allow the company to slash its emissions by 30,000 tons annually.

"It's a great use for our landfill gas," he said.