This study is concerned with two important and inter-related issues: the issue of energy conservation and the issue of environment protection. Fortunately, the success in management and solution of the first issue will produce positive impact on the second one. That means that a reduction in fuel consumption, in the form of energy dissipated, tends to reduce the environmental pollution caused by objectionable products of combustion (e.g. oxides of carbon, sulpher and nitrogen as well as ash and particulate). These statements have been applied to a steam boiler produced by the NASR company. For an insulated steam boiler burning heavy fuel (e.g.C13H28) producing energy of 13.25 MWh and operating continuously for one year (i.e, 8000 h), the results showed that the calculated optimum insulation thickness is about 0.03 m which is required to minimize the total costs of insulation material and fuel consumption in the form of heat lost from the boiler surface. The corresponding emission gases to the environment are 60 Ton/y CO2 for complete combustion, and 35 Ton/y CO2 and 15.2 Ton/y CO for incomplete combustion. The results showed also that when the insulation conductivity increased by 50%-as a result of diffusion of atmospheric water vapor into the macrostructure of the insulation material-the air pollution has increased by 25 Ton/y CO2 for complete combustion and 14.5 Ton/y CO2 and 6.5 Ton/y CO for the case of incomplete combustion. Accordingly it is intensively recommended that the maintenance routine program of insulated hot surfaces must be carefully implemented to save much energy and reduce the environment pollution simultaneously. Finally, it has been shown that the heat lost, and consequently the air pollution, are relatively large while the cost is minimal. To this end, there must be a compromise between the total costs of the insulation material and the fuel consumed on one hand, and the economic damage and public health deterioration caused by the pollutant gases on the other.