I've been doing much recycling of yarns lately.. more of that than knitting actually. This allows me to in the future knit with yarns that I could never afford to buy new from my LYS or online. I'll be very excited to try some of my new yarns, especially the cashmere and cashmere silk blends I've recently reclaimed.
As the internet allows us to though I've met a woman, mother of 7, who owns 2 etsy shops that deal with greening up our earth by recycling, both yarns and giving sweaters new life in a felted form. Her name is Julie and her two etsy stores, my 7 kids which sells reclaimed fiber from sweaters and Heart Felt Fun which sells really cute recycled felted and hand-knit items. She's also running a Go Green for the Holidays contest on her blog until December 1st. So go visit and enter!
We're going green in this house for Christmas.... I can't give any details, you never know who might be reading ;-)