The Welsh Government has spared councils £1.8m worth of fines after they failed to hit its 52% recycling target by 2014.
Natural resources minister Carl Sargeant (left) said that four local authorities had done enough to demonstrate how they intended to improve and hit future targets.
The biggest fine revoked was for City of Cardiff Council, which reached a recycling rate of only 49.67% and faced an £802,000 penalty.
Rhondda Cynon Taf County, Newport City and Merthyr Tydfil County Borough councils also failed to hit the target, but most authorities achieved 52%.
A Welsh Government spokesperson said: “Wales is the fourth best country in Europe at recycling and continues to lead the UK with its recycling targets.
“It is important, however, that we continue to look for improvement wherever possible and we are working closely with all local authorities in Wales to ensure that best practice is implemented across the board.
“The natural resources minister has made it clear that councils who do not hit the recycling target will need to demonstrate how they intend to improve and reach future targets or else face penalties.
“In this instance, he is satisfied that these councils have sufficiently demonstrated this and looks forward to seeing a marked improvement in their future recycling performance.”
The four councils will not pay fines after agreeing to co-operate with the Government’s Collaborative Change Programme, which aims to “identify the changes required in services to ensure that future targets are met in a way that results in efficiencies and cost savings over the long term”.
As reported by MRW, Cardiff Council proposed setting up a regional MRF and restricting residual waste collections in order to help it achieve future recycling targets.
Welsh authorities are required to achieve a 58% overall recycling rate by 2016, rising to 70% by 2025. Failure carries a £200 per tonne penalty.
The Welsh Government is pushing forward with a bill that requires businesses to separate recyclable materials and bans incinerating recyclable materials, to be introduced in January 2017.
Sargeant recently praised Welsh councils on the success of their recycling services, which surpass those in England and Northern Ireland.