The greenest choice for which yarn to use for your next knitting project is obviously the least likely to happen-ideally you'd raise your own sheep organically with sustainable pasturing techniques, shear it yourself with clippers (not electric), leave the wool undyed, and knit your own sweaters and socks. But
The next greenest yarn choice is to use something that is already in the consumer stream. That means heading to thrift stores and garage sales and trying to snag lightly used knit sweaters. Men's extra large cabled sweaters will get you the most skeins for your money. A great guide on how to find, unravel, clean, and measure recycled yarn can be found from AZ.com.
If you can't find or don't want to use yarn recycled from other projects, you can find recycled yarn online. Here is a good guide for what to look for in recycled yarn. Many times you can find good selections on Etsy.com, Ravelry.com, or eBay.com.
Organic Animal Fiber Yarn
Say you can't find recycled yarn that's just right for your upcoming project. The next best bet is to go organic. Try to find a local sheep, alpaca or llama ranch, or attend a fiber festival. Find your organic yarn there and you'll be extra green since the yarn will have traveled the fewest miles. And while most alpaca is raised and sheared in South America, there is a growing number of ranches in the US and other countries that can help you find yarn closer to home. If there isn't any fiber to be found locally, there are a lot of online choices for organic yarns.The Vermont Organic Fiber Company is one of the biggest organic sources for wool in the US. Their O-Wool line is well known for its quality. Many other choices are on the web and a quick search will unveil beautiful organic options.
Organic Non-Animal Fiber Yarn
For non-animal fiber yarn, you'll find an equally wide range of selections. Pakucho Organic Cotton is a good choice, though of course finding locally grown and spun organic cotton is preferable. Growing rapidly in popularity is bamboo yarn, which has a beautiful sheen similar to silk and is very durable. Hemp and soy are also durable and beautiful options for yarn. If you're feeling especially crafty and want to make durable purses, bags or similar projects, you can make your own yarn out of plastic shopping bags.
Ditch the Dyes
Go for yarn that is undyed. Yarn with gorgeous natural coloring can be found easiy. In fact, alpaca have 75 naturally occurring colors. You can find just the right shade while avoiding the carbon footprint of dye, and will be able to better enjoy the naturally occuring color variation of plant and animal fibers.
Make your own scrubs and conditioners; upcycle old clothes and turn them into new accessories--learn how with Planet Green Fashion & Beauty.