A yellow monster truck pushes mounds of rubbish across the summit of Britain’s biggest waste mountain. The 50-tonne beast has huge, spiked, steel wheels that grind mattresses, plastic bottles, trainers and traffic cones into the mud of the manmade peak.

This strange landscape is Packington landfill, near Birmingham. And this week Sita UK, which owns and operates the site, closed its gates for the final time. A boom in recycling, coupled with the 1996 landfill tax have slowly choked the life out of the refuse disposal sector. The charge of £80 a tonne will rise again to £82.60 from April, forcing the industry to deal with its waste in different ways.

Government data highlights the impact of the tax and divert policy: the annual volume of waste sent to landfill has fallen from around 100m tonnes in 1997 to less than 39m tonnes in 2013.

David Palmer-Jones, chief executive of Sita UK, noted that when he took over the job in 2009, 90% of the country’s waste was going to landfill. It is now about 50% and is forecast to drop to just 10% by 2020. “You can see the dramatic effect this has had on our company,” he says. “So we have had to learn a whole new business model. This has been so major and so swift in its transformation.”

Sita is now shutting down its landfill operations completely and investing in adjacent areas, such as creating energy from waste. It has pumped £1.5bn into these areas since Palmer-Jones took the helm. In 2009, Sita had 21 landfill sites, which has fallen to 13 at present. This will fall again to eight next year, then seven in 2017 and just three by 2020. “That really does mirror other companies,” says Palmer-Jones. “It’s uneconomic for us to continue.”

The wind-down is mirrored by Viridor, another of Britain’s leading landfill operators, which has 19 active sites. Viridor admits most of these are destined for closure. “It’s quite stark; this is quite a shift in our industry,” says Palmer-Jones. “Certainly, you are not going to invest in landfill in the future. The landfill tax makes it an unprofitable business.”

For 50 years, the 385-acre site has been one of the city’s less savoury landmarks, rising 156 metres (512ft) above sea level and standing about 59m high. In that period it has shoved all sorts into the ground: curtains, clothes, bunk beds, even a whale’s fin the size of a car bonnet.

So what is to become of this historic carbuncle on the landscape? “There is another 30 years of work at the site to treat leachate (the liquid that drains from landfill) and operate the gas plant,” says Palmer-Jones. “It’s a natural end to an amazing 50 years for this landmark.”

Sita will continue to extract methane gas from the rotting heap via a 14-mile network of pipes and around 300 extraction points. It is then burnt at the onsite gas plant to run turbines that produce 7MW of power – enough for 25,000 homes. It will also continue to build its garden waste composting, and wood recycling operations at Packington.

As we approach the wood pad in a four-wheel drive, the jagged outline of several 15m-high mounds become visible. Kevin Lane, site manager at Packington, reckons there is around 5,000 tonnes of wood here. From a distance, the splintered landscape resembles an earthquake-ravaged town. What looked like the broken skeletons of buildings is actually a jumble of discarded pallets, bits of old plywood and scaffold boards – food for the high-speed wood shredder that growls nearby.

The hungry machine chews up the wood and then forces it through a meshed screen with different sized holes that separates the finer, almost sawdust-like, bits into one pile and spits out the roughly chopped chunks along another conveyor. This processed wood will be shipped to incinerators in Buxton, Derbyshire, or Scotland, where it will be burnt to produce power.

This growing operation is another example of the sort of diversification that Packington has had to embrace in order to survive in a post-landfill world. Palmer-Jones is also keen to take advantage of Packington’s connection to the national grid, which feeds the power generated by the onsite gas plant directly into the network.

“We’ve been looking into the possibility of putting solar power on our sites to become a solar park,” he says. “Having a grid connection is an incentive. If you have a grid connection that you have invested in then why not try to exploit that?”

The rest, including most of the mount waste will be covered with thousands of tonnes of soil, lined with a plastic membrane (to stop water getting in and gas escaping), more soil and then grass. “We own quite a lot of land around it [the landfill],” says Palmer-Jones. “Quite often our sites go to grass because there’s a lot of pastoral land.”

It seems strange to think that in the space of a year this giant rubbish dump could be an open green space with uninterrupted views across Birmingham, including the nearby NEC and airport, and the rest of the West Midlands. Surprisingly, there is virtually no whiff of rotting rubbish at the summit.

It is because virtually no food or black-bag waste comes here any more – Packington Landfill is now almost 100% commercial and industrial waste. In the 1980s, around half its business was household refuse. But, since 1994, domestic rubbish from the area has been sent to the nearby Tyseley incinerator, the Veolia-run plant that creates energy from waste.

Friends of the Earth has criticised the plant for belching out high levels of carbon dioxide and say it is partly to blame for the fall in recycling rates in the city. Critics believe the move towards burning black-bag waste for energy has made many people complacent about recycling.

Palmer-Jones wants Westminster to take a leaf out of the Welsh assembly’s book in order to raise “flatlining” recycling rates. “Recycling rates (UK average) are at 43% to 44% – there are lots of reasons why recycling is coming to a standstill,” he says. “There is pressure on local government’s spending power – and that is quite extreme. One of the things they cut early is communication. When you cut that you detach yourself from engagement with the public.”

By contrast, Wales has ringfenced cash to support and promote recycling in the principality. “It is better funded in Wales, and they have lots more joined-up thinking and put lots of effort into their recycling strategy,” he says.

With that sort of backing, it should come as no surprise that Wales has a recycling rate of almost 60%. “It’s a choice and they give it more funding per capita than in England,” says Palmer-Jones, noting that unless there is a renewed push in England, the 50% by 2020 target set by Brussels is at risk. “I understand the funding issue is difficult; do you choose old age pensioners and kids, or do you choose recycling?”