Bristol City Council has been accused of dragging its feet over a scheme to treat part of the region's household waste using pioneering technology.

Ethos Recycling, which took over the project when Compact Power went into administration early last year, wants to build a gasification-pyrolysis plant – where waste is "pressure cooked" – on the site of the old incinerator off Kingsweston Lane, Avonmouth.

It has the money and the planning permission, says leading opposition councillor Gary Hopkins (Lib Dem).

The wrangle with the council is over a lease for the site.

An Ethos spokesman said the firm did not wish to comment, except to say that a letter written to the council would be considered by the ruling Labour cabinet on Thursday night.

But an official council report says: "Ethos has threatened to sue the council for not honouring rights which Ethos alleges it has to take over and vary the previous agreement and lease with Compact Power."

The Liberal Democrats, the largest party group on the city council, oppose plans now going ahead to apply to the Government for Private Finance Initiative (PFI) funds for one or more major waste treatment plants.

The technology cited to show how the PFI cash might potentially be used – is a new incinerator.

That does not mean the three councils behind the bid – Bristol, North Somerset and South Gloucestershire – are favouring an incinerator or any particular technology at this stage.

But the Lib Dems fear the West could end up being saddled with an incinerator, probably at Avonmouth.

They believe gasification-pyrolysis – where waste is heated using a method similar to a pressure cooker to release gases that can be turned into energy – should be given a chance.

Mr Hopkins said the council had dragged its feet over letting Ethos have a lease. "The way this has been handled leaves a lot to be desired," he told the Post. "While it was still official policy to continue dealing with Ethos and go forward with this pioneering technology, the council was in fact signing contracts which had the opposite effect."

One of these, he said, was the deal with the two neighbouring councils last year to adopt a waste strategy which included the PFI bid.

Meanwhile, council officers are recommending to the Labour cabinet meeting that commitments made in 2004 and 2005 are ditched. These referred to a two-year research and development project with Compact Power. But the report says that the project has yet to start – four years on.

It proposes that the council retains the site for the requirements of West of England waste policy and does not grant a lease "as the original agreement was with Compact Power and no such agreement is in place with Ethos Recycling."

City council spokeswoman Lynda Wookey said of the site in question that "any previous arrangement was with Compact Power, who are now in administration," adding: "The council is committed to encouraging all technology providers, including those who specialise in pyrolysis and gasification, but cannot bias themselves towards one provider."