Steelmaker Corus is investing £60m at its Port Talbot plant to reduce carbon dioxide (CO2) emissions at the site.
About half of the plant's energy is already produced on site
It produces more C02 than any other plant in Wales except Aberthaw power station in the Vale of Glamorgan, according to Environment Agency Wales.
Corus managers say the money, the largest investment at the site since it was bought by Tata Steel, will pay for new energy management technology.
Union leaders said it was a vote of confidence in Port Talbot.
Corus said the investment would reduce C02 emissions by reusing gas generated inside the Basic Oxygen Steel (BOS) plant.
It said it already produced around half the energy needed to run the steelworks on site.
Acting managing director Robert Bizzell said: "This is a significant vote of confidence by the Corus board and also by our new owners.
"This investment will play a significant part in creating a sustainable steel industry here in Wales."
He said cutting its energy costs has been identified as an important priority if the business was to compete on the global stage.
David Ferris, chairman of the multi-union in Port Talbot, said: "Not only is this great news for employees at the works, but there are great advantages for the community and the environment".