DuPont Nutrition & Health plans to turn its plant in Grindsted, Denmark, into a carbon dioxide neutral facility by next year.
To achieve this, the company will retrofit the plant's large coal boiler to burn wood chips.
By doing so, DuPont is expected to cut its carbon dioxide by 45,000 tonnes annually, while also delivering heat to half of the town's district heating.
DuPont Grindsted plant manager Martin Madsen said: "To fire with wood chips instead of coal is a huge win for the environment.
"Not only will we remove 45,000 tonnes of carbon dioxide currently produced using non-renewable energy, but we will also increase the amount of 'waste' energy that we sell to the local district heating network."
The reduction in carbon dioxide emissions expected to be achieved by DuPont is equivalent to removing 20,000 average Danish cars from the road for a year, according to the company.
The Danish Agency Energy has agreed to grant DKK61m to support DuPont in its sustainability energy measures at Grindsted.
DuPont said that the 3,600 district heating consumers would benefit from the green transition.
The Confederation of Danish Industries energy group branch director Troels Ranis said: "We are experiencing an increasing interest from companies to reduce carbon dioxide emissions.
"The project in Grindsted can show other companies that conversion to renewable energy and focusing on sustainability goes hand in hand with commercial interests today."
DuPont expects to start the construction work in August this year in order to operate the plant by the first half of 2017.
The company said that the Grindsted plant also switched to 100% Roundtable on Sustainable Palm oil (RSPO) certified palm oil in 2014/15.
