The waste processing systems in a CELSS are critical to the recycling of matter needed for a closed system. The waste processor is really half of the loop. Inedible plant parts, food processing wastes, and human wastes need to be recycled in such a way that CO₂ is released to the atmosphere for plant growth and minerals are recovered to make plant growth media. Water also needs to be recycled in a CELSS. This includes wash water, urine, used plant growth media, and water transpired by the plants. It is likely that a combination of physicochemical and biological means will be used for water recycling. In fact, the water transpired by plants is remarkably clean and can be collected from the growth chambers.

It has been estimated that 50% or more of dry plant matter is inedible. The inedible plant material, mostly carbohydrate in nature, is composed primarily of cellulose but also contains considerable quantities of hemicellulose and lignin, and some protein and ash. Conversion of the indigestible cellulosic plant material into monosaccharides would provide sugars that could be used directly for human food or as a nutrient source for the growth of yeasts, fungi, or plant cell cultures. Sugar recovery could be beneficial as reflected by decreases in the growth area required determined when part of the daily calories consumed are provided from the converted materials.

Pretreatment of the lignocellulosic material is necessary if yields from enzymatic hydrolysis of the cellulose are to be greater than 60%. This is due to the structure of the plant cell wall where cellulose is embedded in a hemicellulose matrix that is sealed by lignin. This limits the surface area available to enzymes. Many pretreatments have been investigated: grinding or shearing, use of chemicals and solvents, steam and thermal treatments, radiation, and microbial modification. An ideal pretreatment for use in a CELSS would be simple, safe, effective, avoid use of toxic materials, and use materials that are easily recycled. Two approaches fit these criteria: (1 ) liquid water pretreatment of cellulose at elevated temperatures; and (2) biological treatment of non-cellulosic constituents by growth of lignin-degrading fungi that produce (oyster) mushrooms which are edible.

Inedible plant material that cannot be converted into usable products and human wastes will likely be burned in some way. A number of different types of incineration technologies are available. A good choice is supercritical water oxidation. This process requires high temperatures, but has short residence times (about 1 min). It also can be controlled such that complete oxidation of biological materials to CO₂, N₂, and H₂O can be obtained. It is also possible that a significant portion of the biological nitrogen can be converted into NO₃ which is useful as a plant fertilizer. Minerals would be relegated to the ash fraction and some of which can be recovered. This process is not perfect however and a recalcitrant fraction containing material analogous to graphite or carbon black will be generated. This lost carbon will have to be replaced from stored material in space-deployed system.