Energy recovery by waste incineration has a double function as waste treatment method and supplier of electricity and/or heat, thereby linking the systems of energy and waste management. Both systems are undergoing great changes, mainly due to new regulations. Important regulations within waste management in Sweden are a ban on landfill of combustible waste and organic waste, and a tax on landfill of waste. New waste incineration facilities are being built in order to increase capacity to meet these demands.

The aim of this thesis is to investigate impacts on Swedish district heating systems of increased use of waste as a fuel in economic and environmental terms, the latter mainly by assessing emissions of carbon dioxide. Of importance is the influence of various policy instruments. To highlight the connection between the energy and waste management systems and how these influence each other is another goal, as well as the function of district heating systems as user of various waste heat supplies. An important assumption for this thesis is a deregulated European electricity market, where the marginal power production in the short term is coal condensing power and in the long term natural gas based power, that affects the conditions for combined heat and power in district heating systems. The method used is case studies of three Swedish municipalities that utilise waste in their district heating systems. In two papers, the scope is broadened from the energy utility perspective by comparing the energy efficiency of energy recovery and material recovery of various fractions, and the effect of including external costs for CO₂ as well as SO_2, NO_x and particles. The ambition is that the results can be part of the decision making process for energy utilities and for policy makers in the energy sector and waste management.

It is economically advantageous to use waste as a fuel in the energy sector and regulations in the waste management sector and high taxes on fossil fuels contribute to profitability. Waste incineration plants are base suppliers of heat because they derive revenue from receiving the waste. Economic conditions for waste incineration are altered with the introduction of a tax on incinerated municipal waste. A conflict may arise between combined heat and power production in district heating systems and waste incineration, since the latter can remove the heat sink for other combined heat and power plants with higher efficiencies. Combined heat and power is the main measure to decrease carbon dioxide emissions in district heating systems on the assumption that locally produced electricity replaces electricity in coal condensing plants. It can be difficult to design policy instruments for waste incineration due to some conflicting goals for waste management and energy systems. Comparing the energy efficiency of material recovery and energy recovery is a way to assess the resource efficiency of waste treatment methods. From that perspective, if there is a district heating system which can utilise the heat, biodegradable waste and cardboard should be energy recovered and plastics and paper material recovered. To put costs on environmental effects, so called external costs, is a way to take these effects into regard in traditional economic calculations, but the method has drawbacks, e.g. the limited range of environmental effects included and uncertainties in the monetary valuation of environmental effects.

A century after the introduction of the first district heating system (DHS) on a commercial basis, the technology has still not become as widespread as it deserves to be. The role of district heating (DH) has meant not only comfort for its users but also less impact on the environment. At a time when the negative impact on climate of using energy and the liberalisation of energy markets are prominent issues, efficient DHS which are competitive both at national and international levels are needed. DH could be introduced at additional locations and existing networks could expand in areas with detached houses and industries. Combined heat and power (CHP) production promotes the integration of the Swedish DH sector with the rest of Europe.

A step that enhances the benefit of DH is co-operation in DH systems at local and regional levels. The established DHS in many Swedish municipalities make this step easier to implement. Industries and DH utilities may collaborate around heat supply by looking beyond their traditional boundaries, thereby promoting an efficient use of energy.

This study enlightens the importance of co-operation in DH systems using several real-world cases. The impact of the introduction of external cost, the deregulated power market, investments and various policy instruments on the energy systems is considered. Some of the cases indicate clear advantages even under current conditions whilst others are dependent on the future boundary conditions assumed. In most cases CHP production is encouraged as a result of interconnection of DH and industrial energy systems. The results of this study may serve to encourage decision makers to think in terms of co-operation.

The modelling of the regional and industrial energy system was carried out using an improved version of the MODEST energy system optimisation tool. The improvement of the modelling environment of the tool has substantially facilitated the system analysis work.

It should be mentioned that though co-operation could lead to lower costs and more efficient use of energy, other factors such as the relationships between the actors, may hinder a collaboration project. Independent techno-econornical analyses like these may help create a forum for discussion for the parties involved where other aspects of co-operation could be discussed.