In the context of industrial symbiosis (IS), some companies exchange underutilized or secondary resources such as waste, by-products, residues, low grade energy, wastewater and greywater. These underutilized or secondary resources differ in terms of physical properties and perceived value compared to goods exchanged on the business to-consumer or business-to-business markets. Moreover, to facilitate the exchange of such resources, asset specific investments may be required. Collectively these conditions create several challenges for determining the compensation, or pricing formula for the exchanged good or service. Companies create different pricing solutions to these challenges – yet the details of these challenges and their solutions are rarely documented in literature. This is not surprising as the terms of pricing agreements between firms are agreed upon behind closed doors with neither intermediaries nor researchers present and are often considered confidential. To improve knowledge on the types of pricing challenges and solutions in operational and developing industrial symbiosis cases, empirical research with 28 interviews covering 52 IS exchanges was conducted. The interviewees explained the terms of the pricing agreements, the challenges they had encountered and the solutions on the highest level of detail they could without breaching confidentiality. In an iterative process involving both authors, the analysis sought to identify categories of challenges and link them to a variety of solutions. The following main challenges were identified:

1. Quality and quantity of residuals are unstable and can fluctuate.
2. The supplier has a legal obligation to safely manage residuals.
3. While production costs of residuals are typically covered by the sales of primary products, making them usable incurs additional costs.
4. IS relationships often have high transaction costs.
5. IS delivers diverse values to the parties involved.
6. Residuals may lack comparable market prices.
7. Costs of alternatives are dynamic.
8. IS partners often have diverse backgrounds.
9. Investments are upfront and can be significant.
10. Asymmetrical investment distribution between partners.
11. Power asymmetries between partners.
12. Difficulty with ex-ante performance assessment.
13. Dynamic nature of conditions.

For each of these challenges several solutions were also identified. For example, “residuals may lack comparable market prices” can be solved by agreeing upon a predetermined calculation which pegs part of the agreed price to an index or an array of goods. Another solution to this challenge is to add price ceilings, price floors or price renegotiation clauses in the agreement. Finally, some companies solved this challenge by making “ the user’s sale price” a factor in the pricing agreement.

These findings make a significant contribution to researchers’ understanding on the conditions and terms surrounding the pricing of IS exchanges and contributes to practice by providing both industry and intermediaries with an array of proven solutions to common challenges. Neither the challenges nor the solutions can be considered exhaustive as they are limited to European cases.

This research is part of the project “Creation Of new value chain Relations through novel Approaches facilitating Long-term Industrial Symbiosis” (CORALIS) and has received funding from the European Union’s Horizon 2020 research and innovation programme under Grant Agreement No 958337.