In line with the European Union’s move and the Green Deal initiative, Latvia needs to reduce CO2 emissions by 2030 and reach their complete elimination by 2050. Since waste management sector is associated with high greenhouse gas emissions, the sector will experience changes in the near future, and its sustainable development is linked to overcoming technical, economic and environmental challenges. The work aims to find solutions to the development of the waste sector in an environmentally sound manner, ensuring that the sector is closer to climate neutrality in 2050. Waste management is at the forefront of major changes and challenges in achieving regulatory objectives. In view of the changes expected and taking place in the sector, it is essential to carry out studies on resource and material recovery optimization options and potential for waste streams to be recycled and the energy recovery potential for non-recyclable streams. Acquiring knowledge and raising awareness of the role of changing management practices in saving CO2 emissions – avoided emissions – will allow the sector to move towards climate neutrality. This article analyses biodegradable waste management options and proposes the optimal solution for biodegradable waste management towards climate neutrality.