One local said he stepped outside to go to work and saw a "massive plume of black smoke".
"It's bloody weird eh," he said.
He didn't hear any explosion.
The treatment plant backs on to Cowles Stadium and Cuthberts Green.
Police officers are keeping people well away and across the fields to Pages Rd.
Canterbury DHB's Community and Public Health unit has issued a public health warning for smoke.
"Air around this location is smoky and there is potential that people who are sensitive to smoke such as those with heart or lung conditions, pregnant women, young children and the elderly may experience symptoms including coughing, shortness of breath or eye, nose and throat irritation."
Canterbury Medical Officer of Health Dr Cheryl Brunton said exposure to smoke could worsen pre-existing health conditions such as asthma and heart disease.
"Anyone experiencing health issues from the fire should contact their general practice team for advice, in the first instance," she said.
The smoke is expected to linger for the next few hours.