This study aimed to determine the effect of optimum pipe insulation thickness on energy savings and air pollution under greenhouse conditions. In this regard, an optimization model based on a Life Cycle Cost (LCC) analysis was carried out using the P1–P2 method. Three fuel types, coal, natural gas, and fuel oil, were tested with nominal pipe sizes ranging from 25 to 65 mm, and hot water was used in the system. Our findings showed that the highest insulation thickness (0.807 m), the greatest energy savings ($62.351/m), and the lowest payback period (0.502 years) were achieved with a 65 mm pipe size for fuel oil. Overall, the insulation minimizes heat loss through the heating pipelines, resulting in economic and environmental benefits. Fuel oil was determined as the best option for savings in this study. Hence, for fuel oil utilization, the emissions of CO2 varied from 2.762 to 3.798 kg/m and SO2 from 0.014 to 0.020 kg/m for pipe thicknesses ranging from 25 and 65 mm, respectively.