A new Electric Arc Furnace will be built at NZ Steel's Glenbrook Steel Mill.
Climate Change Minister James Shaw says it is a big step towards cutting the pollution that causes climate change.
It will cut 800,000 of emissions from day one - the same as about 300,000 cars.
The cost of the project is $300 million and the taxpayer is stumping up $140 million of that.
James Shaw spoke to Guyon Espiner.
