Vinci was earmarked as preferred bidder to build the futuristic waste incinerator and recycling plant at New Barnfield, which was expected to cost over £100m.
But the Government called in the scheme after the local authority approved construction on greenbelt to over rule the council and reject the waste company’s bid.
A Veolia spokesman said: “Following a legal review of the decision made by the Secretary of State in July to refuse planning permission for the New Barnfield Recycling and Energy Recovery Facility, and after consideration by our board, Veolia will not seek to further challenge that refusal.”
Veolia will now present Hertfordshire County Council with a new project plan.
Campaigners against the Barnfield plant said they believed this would very likely to be an incinerator in another part of Hertfordshire.