An industrial-scale environmental programme has begun to help reduce greenhouse gas emissions.
The new site will focus on composting and recycling
The Integrated Recycling project in South Yorkshire will focus on composting and recycling.
It is being funded with £700,000 by regional development agency Yorkshire Forward and with £489,000 from the landfill tax credit scheme Biff award.
Based on the site owned by steel company AvestaPolarit at Shepcote Lane, Sheffield, the scheme will create more than 30 jobs.
New technology will allow the composting of green waste from local authorities and carbon-containing wastes such as wood and cardboard from AvestaPolarit.
Organic waste arising from the washing of sheep's wool at farms in West Yorkshire will also be able to be composted.
The resulting compost will be used on community parks and garden projects.
Scrap plastics from the steel giant will also be recycled into plastic pallets.
Alice Owen, head of sustainable development at Yorkshire Forward, said: "Yorkshire Forward has a target to reduce greenhouse gas emissions by 20% by the year 2010.
"We are finding ways of transforming the economy to ensure energy and resources are as productive as they can be."
AvestaPolarit energy manager Andy Hay added: "AvestaPolarit's policy recognises the principles of environmental protection and sustainable development.
"Our involvement in this project shows we are translating these words into positive action."