Eco management and auditing volume 8 issue 3 2001 doi 10 1002%2fema 160 jouni korhonen; ilkka savolainen cleaner energy production in industrial recycling networks

Eco-Management and Auditing Eco-Mgmt. Aud. 8, 144–153 (2001) DOI: 10.1002/ema.160 CLEANER ENERGY PRODUCTION IN INDUSTRIAL RECYCLING NETWORKS Jouni Korhonen 1, * and Ilkka Savolainen 2 1 University of Joensuu, Finland 2 VTT Energy, Finland, and Helsinki University of Technology, Finland This paper considers the possibility to develop cleaner energy production with a perspective on regional material and energy flow management. The co-production method of district and industrial heat/steam and electricity (of heat and power, CHP) using renewable or waste fuels is viewed as a physical anchor tenant function for locally based industrial recycling networks. Arguably, this production method may be used to enhance the integration of producers as well as end-consumers into a local recycling network of matter and energy. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment. Received 19 June 2000 Revised 17 January 2001 Accepted 27 March 2001 INTRODUCTION I t has been possible to follow the philoso- phy of unlimited growth of throughput in societal systems, which relies on unsus- tainable use of renewable flow resources and especially on non-renewable stock resources, i.e. the fossil raw materials. In many indus- trial countries these resources are imported and the local natural limiting factors have not been the determining factor in the develop- ment of the regional industrial systems. In- dustrial systems are not adapting to the local environmental conditions and constraints. The question of societal energy production and use is one of the most severe environ- mental questions of today, because it is still largely based on the non-renewable stock re- sources of fossil coal, oil and gas and because it generates CO 2 emissions to the atmosphere creating the risks involved in the changing of the climate. The use of fossil fuels contributes also to many other environmental problems such as acidification, eutrophication and for- mation of tropospheric ozone and also weak- ens the air quality (Linden, 1994; Hayes et al., 1997). Energy is produced and consumed practically everywhere in the world and ev- ery regional industrial system has its own energy supply arrangements. In this article, we consider the possibility of enhancing the emergence of cleaner energy production strategies in a regional context. In the first part the co-production method of district heat, industrial heat and steam and electricity (CHP, heat and power) is pre- sented as a potential driver of a local recy- cling network. Then some conditions of success of the application of CHP as well as * Correspondence to: Dr Jouni Korhonen, Department of Eco- nomics, University of Joensuu, PO Box 111, 80101 Joensuu, Finland. Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment. CLEANER ENERGY PRODUCTION barriers to the further development of re- gional material flow management around CHP are discussed. ON ENERGY AND INDUSTRIAL ENVIRONMENTAL MANAGEMENT Approximately 80% of global energy produc- tion is based on the burning of fossil coal, oil and gas. These resources are non-renewable and their use generates carbon dioxide (CO 2 ) and sulphur dioxide (SO 2 ) and other emission such as NO x and particulates. Greenhouse gas emissions, notably CO 2 , from industrialized countries are limited by the Kyoto Protocol to the UN Convention on Climate Change. The emissions of industrialized countries should be reduced by 5% on average from the level of 1990. The commitment period for the task is from 2008 to 2012. The EU should reduce its emissions by 8%. However, in the long run, much deeper emission reductions will be re- quired to prevent the progress of climate change. SO 2 and NO x emissions of European countries are controlled by the Gothenburg 1999 Protocol of the Long Range Trans- boundary Air Pollution Convention of the UN Economic Commission of Europe. The Proto- col limits the emissions of SO 2 by 63% of the 1990 level and NO x by 41% of the 1990 level by the year 2010. One can note that the con- cern of the environmental impacts of the emissions has manifested itself in emission limits targeted for countries and country groups. The main task of environmental manage- ment in the case of industrial energy question is to develop cleaner energy production strategies with the aim in reducing the use of non-renewable fossil stock inputs as fuels and reducing the waste and emission outputs. The direction to go in is to substitute non-renew- able stock resources with renewable natural flow resources by respecting the natural re- newal rate of the flows. In the substitution also the use of waste material and residual energy can be considered. By substituting non-renewables with renewable flows and with (renewable) wastes the industrial activity can reduce its burden on the non-renewable stocks. This would also result in the reduction of waste and emission outputs, because the burning of fossil fuels would be minimized. CO-PRODUCTION OF HEAT AND ELECTRICITY FOR REGIONAL MATERIAL AND ENERGY FLOW MANAGEMENT A regional support system In this part, regional material and energy flow management for industrial and consumption systems of energy is considered with the aim in reducing the use of fossil fuels and the generation of wastes and emissions. 1 The re- gional context is the one where practical deci- sions and implementation of environmental policy and cleaner energy production will take place. A regional context may also be fruitful for the implementation of cleaner pro- duction initiatives as here the regional actors may face common pressures for environmen- tal management or common environmental and economic goals. Possibly a common agenda for the regional environmental pro- gramme could be developed in this way. The practical side of the concept of indus- trial ecology (IE, Frosch and Gallopoulos, 1989; Graedel and Allenby, 1995; Ayres and Ayres, 1996) aims to facilitate the emergence of a local industrial system, which is based on co-operation between the actors involved in material and energy flow management. The idea is to create value for waste flows and use waste in the industrial activity as a resource input. The literature in IE seems to agree that there is a need to identify a certain key orga- nization in the region around which an ‘in- dustrial ecosystem’, i.e. a recycling network of industrial actors, could emerge. Such a key activity has been called as a ‘symbiosis insti- tute’ (Baas, 1998), a ‘support system’ (Boons and Baas, 1997; Baas, 1998), an ‘anchor tenant’ (Lowe, 1997; Chertow, 1998; Cote and Cohen- Rosenthal, 1998; Korhonen et al., 1999), an ‘initiator’ (Brand and de Bruijn, 1999), ‘a 1 For a discussion on various conceptual approaches to regional metabolism and regional material flow management see Brun- ner et al. (1994), Burstro¨m (1999a,b), Baccini et al. (1993). Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 145 J. KORHONEN AND I. SAVOLAINEN process unit’ (Wallner, 1999) or a ‘separate co-ordinating unit’ (Linnanen, 1998). One can define two general types of this kind of support system of regional material and energy flow management or of regional indus- trial ecology, an institutional support and a physical support system (Burstro¨m and Kor- honen, 2001). By institutional support we un- derstand political and regulatory or decision making support, information management, so- cial and economic infrastructure building and education i.e. activities that could suit the everyday activity of a local public authority such as a local municipality organization. In this article, we are going to focus on what we see as a potential physical anchor tenant activity or an entity in regional material and energy flow management. By a physical support sys- tem we denote the role of an actor in the region that is the driver of some of the main physical material and energy flows of the region. In theory, this actor can serve as the key activity around which the main material and energy flows can be arranged, and hence, through environmentally orientated schemes, con- trolled and reduced. Co-production of heat and electricity Only in three countries in the world, Finland, Denmark and the Netherlands, have the re- gional energy supply systems been arranged to large national scale according to the co-produc- tion principle of heat and electricity (CHP, Cogen, 1997; Korhonen et al., 1999, 2001 2 ; Lehtila¨ et al., 1997). In this production method, the waste energy from electricity production is cascaded (for discussion on resource cascading see, Sirkin and ten Houten, 1994) and used in the production of district heat for local house- holds or is used to satisfy the industrial heat/ steam demand. Without the co-production principle, the waste energy would be dumped into the local ecosystem as emissions and wastes. The working hypothesis of the paper is to consider the potential of the CHP method to serve as an anchor tenant of a local recycling network or of an industrial ecosystem. The CHP method reduces the use of input energy by 30–40% if compared with separate produc- tions of electricity and heat. This also reduces emissions from the system, and naturally fuel use, which improves the economy and makes it possible to use inhomogeneous fuels such as biomass, wood waste and fuels derived from refuse. The use of these types of fuel cuts emissions further. In most of the industrialized world, the production of electricity takes place mainly in separate condensing plants (besides the three northern countries). In Table 1, the share of co-generation of the total national electricity production for EU and some European coun- tries is given in approximate figures for 1999 (see Cogen, 1997, 2000). The EU share is under 10% at the moment. The EU target for increas- ing the application of CHP is defined as reach- ing the level of 12% in 2010. CHP IN AN INDUSTRIAL RECYCLING NETWORK Studies conducted in Finland have indicated that significant reductions in fuel use and emission generation can be achieved with recy- cling networks that have been arranged into CHP (Korhonen et al., 1999; Korhonen, 2000; Korhonen et al., 2001; Korhonen, 2001). In Figure 1, the potential of a regional CHP power plant to act as the key activity in regional material and energy flow management is con- sidered. The hypothesis here is that a region has a large and diverse industrial structure as well as a residential area with households, commercial and office buildings and services, which are located in close proximity to the industrial activity (within a few kilometres). The CHP plant of the core industry of the region can drive cleaner energy production in Table 1. The 1999 share of co-generation of total na- tional electricity generation in some EU countries (ap- proximate figures, see Cogen, 1997, 2000) EU: less than 10% UK: 6% Germany: 10% France: 2% Denmark: 50% 40%Netherlands: Finland: 35% 2 For an overview on CHP application see Gustavsson (1994), Verbruggen (1996), Grohnheit (1999). Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 146 CLEANER ENERGY PRODUCTION Figure 1. CHP-based energy production in an industrial recycling network. the system by providing the system, i.e. the industries as well as the city and households, with electricity. The waste heat of electricity generation is used for satisfying the industrial process heat/steam demand throughout the year and the demand for district heating (and even cooling) in the city. Additional use op- portunities for waste heat could be found for example in greenhouses or in local fish farm- ing, to benefit from heating of the water (see Ehrenfeld and Gertler, 1997). Further, if the fuel is based on wood or forestry waste, the nutrients embedded in the waste ash of the CHP plant can serve as fertilizer in the local forest ecosystem (Ranta et al., 1996; Korhonen et al., 2001). It is also possible to develop the utilization of the nutrients as fertilizer in fields in agriculture or in local horticulture or various gardening projects. The output sup- ply of the regional CHP plant is then a rela- tively diverse as waste energy (heat) is used as a product with value. The use of imported non-renewable stocks is reduced and also re- gional fuel supply activities create new work- ing places. To consider the input side and the regional material and energy flow use of the system in Figure 1, one can note the technique of flu- idized bed burning and its ability to use the industrial wastes and REF from households as fuels. This technique has become the main technology in Finnish energy systems. When the technique is compared to a more tradi- tional pulverized coal burning, one finds the possibility to use relatively heterogeneous fu- els, such as biomass, or waste fuels. In the presented hypothesis the largest regional in- dustry is a renewable resource based indus- try, e.g. a forest industry. In the system scenario, the use of the fluidized bed burning technique creates a situation in which the fuels are renewable flows of the local ecosys- tem or local renewable waste flows from in- dustry and from the city and households. Peat reserves (see the discussion below) or local forest residues are used. Local waste flows, Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 147 J. KORHONEN AND I. SAVOLAINEN e.g. those derived from wood-based flows such as wastes from saw-mills, pulp mills, plywood mills and furniture mills or paper and package waste originated and source sep- arated household wastes are used to substi- tute imported fossil coal and oil. The ordinary waste papers and a major part of packaging waste are, however, recycled back to papermaking. SOME CONDITIONS OF SUCCESS OF CHP-BASED RECYCLING NETWORKS In theory, the CHP method with efficient waste energy and waste fuel utilization would seem to be a fruitful area of development for environmental policy and industrial environ- mental management to strive toward the emission reduction targets. However, the share of co-generation from the national elec- tricity generation is still quite small in most of the industrial countries. In the following parts of the paper we try to identify some of the main conditions of success of CHP-based re- cycling networks. Also, the barriers to the wider application of this method as well as the anchor tenant strategy based around it are discussed. Experiences arise from studies in Finland. Renewable flow resources as fuels The burning technique (fluidized bed burn- ing) in the presented system scenario enables the utilization of inhomogeneous fuels. Biomass and waste fuel use in one major production plant of a regional network of companies can contribute to the development of a recycling network. Industrial actors, but also consumers and agriculture, can provide side-products and wastes that can be used as fuels in the CHP plant. Sectors such as forestry, the mechanical wood industry, pulp and paper or the food industry can provide many waste flows suitable for fuels. There is also biogas (methane, CH 4 ) utilization from landfills through pipelines leading into the boilers or small-scale CHP units. Municipal and industrial wastewaters have been treated in Finland with the aim of separating the solid particles from the water. These are dried and manufactured into products that can be used as fuels in energy production. Wastewater- embedded methane (biogas) can be gathered and used in boilers for energy. Further, given certain conditions, e.g. adequate source sepa- ration, recycled fuels (REF) from households serve as fuels. Similarly, if there exists local abundant renewable natural resources, these can substitute imported fossil fuels with the incineration technology. Biomass and waste fuels can also be gasi- fied with modern technology and the gas can be fed e.g. into a coal-fired boiler. Therefore, some fraction of the coal can be replaced by renewable fuels. Fossil natural gas can be used in a relatively efficient way in CHP. It is possible to recover over 90% of the fuel en- ergy and more than 50% of it in the form of electricity, that is, when the plant has both gas turbine and steam turbine cycles. Co-production of district heat and electricity From a strict environmental perspective, it would seem obvious that the global demand of residential and city electricity and heat should be met with CHP applications. In Fin- land, all of the major cities (though relatively small in terms of big cities in larger countries) are arranged into CHP for their district heat and electricity supply. In most of the indus- trial world, the share of CHP is low and power is produced in plants, where the waste heat is released into the atmosphere or into local water systems. The usual precondition of co-production is that a relatively large heating demand exists and the demand is concentrated. Most of the Central European countries, such as UK, Bel- gium, Germany, Switzerland, Austria, the Eastern European countries and a large part of North America have such climatic condi- tions that district heating, heating of office buildings, commercial buildings, blocks of flats and raw-houses is required. Heat can be transferred only over a relatively short dis- tance (10–20 kilometres) and hence the con- centration of the demand must exist in addition to the climatic conditions in order to Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 148 CLEANER ENERGY PRODUCTION establish CHP systems. Such residential con- centrations exist in all of the above-mentioned countries, although there are also cities of low population density e.g. in North America. With the demand and when it is concentrated, it is economic to construct district heating networks. Here heat, i.e. in the CHP method waste energy from the electricity production, is transferred with pipelines and it can be used for heating room space, hot water and for cooling room space. Co-production of industrial heat/steam and electricity There is a demand practically everywhere in the industrialized world for industrial energy that can be supplied from CHP. For instance, industries such as chemical and wood pro- cessing require large amounts of heat/steam or process heat. Here the demand extends beyond the cold part of the year. In industrial processes, the demand for heat is normally the same throughout the year. If the waste heat formed during electricity generation can be used for district heat, but also for industrial heat/steam requirements of local heavy industrial actors, the emergence of a system that uses waste fuels and produces products, but also waste-derived products for the many actors in the local system seems to be possible. The integration of heavy indus- trial systems and end consumption systems such as residential areas of a city is important for environmental management. Often the main problems of environmental management result from the separation of production and consumption, which makes the life cycle of products difficult to monitor and control and energy consumption is increased (Anderberg, 1998). There are some cities in Finland that buy their district heat from the local forest indus- try system CHP plant and hence benefit from its waste energy. There are also problems in these kinds of scenarios. The distance must be less than 20 kilometres and the forest industry must increase its energy efficiency to be able to sell the heat outside. In addition, different ownership structures between city district- heating distributors and power plants of forest industry can prevent co-operation. However, in theory, the goal should be fur- ther pursued, because there are 11 forest in- dustry systems in Finland (‘forest industry integrates’), many of which are located near a residential concentration and its energy sup- ply system. Both of these systems are usually arranged into CHP. If the production of district heat and elec- tricity can be connected to the production of industrial steam, the fuel efficiency of a CHP plant can reach 85%. This means that 85% of the energy that is embedded in the fuels can be used and only 15% will be released into environment, e.g. in the form of water fluxes to the local river or lake ecosystem (Korhonen et al., 1999; City of Joensuu, 2000) In a normal power plant, in which only electricity is pro- duced, the efficiency is approximately 40– 45%. Public ownership In Finland, many of the power plants are owned by the regional public energy com- pany in charge of the distribution of heat and electricity. Arguably, the monopoly situation has made it easier for the energy companies to make investments in CHP, which is very capital intensive and has long payback times (Korhonen et al., 1999). Similarly, a publicly owned company somewhat differs from a company involved in a normal competitive situation of the markets. Elements that are often identified as barriers of environmental networks such as trust or inability to cooper- ate may be less difficult for publicly owned companies. Arguably, a publicly owned com- pany can stimulate cooperation in waste utilization between private firms, which otherwise would not be willing to cooperate with their ‘potential’ competitors within the regional system. Long-term support system for IE A CHP plant can stay in operation for decades. This factor can be seen both as an opportunity for industrial ecosystem and as a barrier for such projects. Industrial systems with many different actors are very diverse Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 149 J. KORHONEN AND I. SAVOLAINEN and complex systems. The diversity of con- flicting interests or the diversity of technical requirements for using different waste flows implies that the development of an industrial ecosystem-type cooperation demands a lot of time. A CHP plant could provide a waste utilization anchor tenant that serves as a long- term support system around which material and energy flow networks are gradually established. On the other hand, the long operation time might hinder innovation in green technology. Local actors might resist the adaptation of new cleaner production technologies, because they have invested heavily in CHP and wait for paybacks that occur after relatively long time periods. This might lead to unhealthy dependencies. For example, some companies can neglect innovation in their own waste and emission management, because some amount of the wastes can be sold to the existing CHP plant in close proximity. Local conditions The system development around CHP similar to the scenario in Figure 1 has been possible in a country such as Finland, which has large renewable natural resource reserves and low population density. The imported fossil fuels can be substituted with local renewables through sustainable extraction of the re- sources. In Finland, the annual cuttings of the forest are lower than the annual growth. The forest ecosystem is able to bind more of car- bon in a CO 2 form than the amount of carbon that is annually released through cuttings and natural drainage (Kauppi et al., 1992). Peat has been defined as a slowly renewable resource in Finland, because its use rate is below the annual growth. One-third of the land area in the country is covered by peatlands (Lap- palainen and Ha¨nninen, 1993; Savolainen et al., 1994; Selin, 1999). The Finnish context, then, is relatively rare and the development of industrial ecology-type material and energy flow structures will be more difficult in coun- tries with fewer resources and more inhabitants. Also other local conditions have made the situation suitable for the development of recycling networks around CHP in Finland. In a cold country, there exists demand for dis- trict heating. There are also lots of energy intensive industries in Finland, e.g. forest in- dustry, which require electricity and process heat/steam. In addition, the prizes and costs of resources and fuels have contributed to the efforts in waste energy and waste fuel utiliza- tion. The price of round wood was reflected in the markets and the industry has reduced its cuttings under the level of sustainable yield and established material cycles and en- ergy cascades. Correspondingly, the costs of the imported fuels such as coal and oil have stimulated CHP application, which reduces the amount of fuels used and can benefit from local waste-derived fuels. BARRIERS OF CHP SYSTEMS Economic barriers Although the demand for heat would exist, the CHP might not be economic. This is be- cause investment in CHP means that power purchased and heat produced otherwise are substituted with on-site fuels and, if the price of electricity is low, e.g. due to inexpensive hydropower or due to subsidized production of condensing power plants through subsi- dized coal, CHP might not be economic (Gus- tavsson, 1994). As noted above, CHP is also capital intensive and the profits or the pay- backs arise only after relatively long time periods. For fast profit seeking private enter- prises, this can reduce the motivation to en- gage into the application of the CHP method. Economic barriers can obviously arise with issues discussed above such as fuel prizes, waste utilization technology, innovation and ownership factors. Regulation and policy One can assume that the CHP method will be incorporated increasingly often to EU and na- tional policy and legislation, because the EU average of the application of the method is much lower than the potential. Arguably, the low share of CHP can to some extent be Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 150 CLEANER ENERGY PRODUCTION traced to policy measures that have not made the conditions suitable for investments into the method. At present, for example, the li- censing and regulatory activities may be planned in accordance with the preferences of large electricity companies. They can set such terms for electricity grid connections that ap- plying CHP will be difficult. Two general types of policy direction for facilitating CHP can be identified. First, requirements for centralized heat planning can enhance the combination of the production of heat and electricity. Experiences from Denmark support this argument (Grohn- heit, 1999). With these arrangements co-gener- ation plants have the potential to supply heat for district heating networks, which are owned and operated by municipal or local energy utilities. Second, the liberalization of electricity production and the access to na- tional electricity grid could be a policy option. Here fair competition conditions for local CHP operators in small district heating net- works or in industry are guaranteed. In such a situation, the CHP plants could, for in- stance, sell surplus power over the national grid and buy back-up power when needed. Second, requirements to reduce CO 2 emis- sions and the use of fossil fuels to mitigate the greenhouse effect, both in global and national scale, will obviously contribute to the motiva- tion to develop policies that enable cleaner production strategies such as CHP. Practical policy instruments to guide the energy com- panies towards improved energy efficiency, and CHP, can be, e.g., voluntary agreements on improvements, taxation of fuel use or emissions, cap and trade policies or regula- tions and licensing. The approach to the taxation of fossil fuels that has been taken in the northern countries of Sweden, Denmark and Finland can be ar- gued to have been successful in facilitating the type of activity and arrangement that would follow some of the aims in CHP-based recycling networks (see Ring, 1997). With taxes, the industry has been encouraged to develop toward natural cycles, to adopt its activity to the reproduction capacity of ecosystems, i.e. to reduce the non-renewables that are used, and use wastes as well as renewable natural resources. Fossil fuel taxes also enhance the regional arrangement of in- dustrial activity, because transportation is based on fossil oil. The road transportation fuels already have high taxes in the Nordic and EU countries. This is mainly due to fiscal factors. Large unit sizes In countries where there exists low popula- tion density, until now, CHP plants, which have required large unit sizes and concen- trated demand, have been constructed mostly for larger cities. The future development of CHP technology also has the potential to move toward smaller unit sizes in CHP plants. This enables the gradual enlargement of heat and steam distribution networks and shortens the payback times of the invest- ments. A separate CHP plant can even be constructed for hospitals, shopping malls, of- fice building blocks etc. This could also make the task of using waste fuels easier, the trans- portation costs of which to larger and more distant plants have been one of the limiting factors of waste fuel utilization in energy pro- duction. In Finland, much of the forest indus- try activity has been arranged into local systems (‘integrates’), many of which are lo- cated near cities, but in addition, in the vast sector many production units of integrated saw mills, pulp mills and paper mills exist that are located far from cities. The further use of the waste fuels from these could be possible in the heating of households nearby provided that CHP networks are established to these small household concentrations. Awareness The barriers to CHP also include barriers re- lated to information and know-how. These seem to be perhaps the biggest barriers to CHP. As noted above, climatic conditions and demand for district heat as well for industrial steam exist everywhere in the industrial world, but the wider application of the method, besides these three countries, is yet to occur. Similarly, the method would seem to provide a useful opportunity for the effort to Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 151 J. KORHONEN AND I. SAVOLAINEN strive toward the international emissions targets, but is still somewhat neglected in much of the environmental planning and de- cision-making processes. The co-generation method may not be familiar to the organiza- tions that might benefit from it. Also CHP can be understood as being outside of the busi- ness area of electricity companies. They might see themselves as providing only electricity, not heat. CONCLUSION The CHP method offers a practical example of technology around which it has been and, given certain conditions, will be possible to develop recycling networks or industrial ecosystem-type structures. The potential in a system, the actors of which use each other’s waste material and residual energy in co- operation, is obvious for environmental man- agement. In theory, this can reduce the risks involved in somewhat isolated approaches that focus solely on an isolated product, sub- stance or waste stream or on an individual process. In this way, the tendency toward problem displacement, e.g. shifting the wastes from one part of the industrial system to some other part of the system, could also be reduced. Our purpose has merely been to identify some of the potential embedded in the philos- ophy of CHP plants as anchor tenants of local recycling networks and discuss some of the barriers involved. Industrial ecosystem theory as well as its application in local recycling networks or eco-industrial parks is still in its infancy and the identification of some univer- sal management or design principles seems rather obsolete with the current amount of documented empirical material. The already existing approaches, techniques or tools of corporate environmental management as well as the different environmental policy instru- ments need to be used. A local recycling network that includes a diversity of actors that use each other’s wastes in cooperation could be taken as a vision towards which one could strive with material flow models, life cycle assessment or environ- mental management systems. Correspond- ingly, environmental taxes, direct regulation or cap and trade policies can give incentives for developing practical IE applications. 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He is currently working as an Assis- tant Professor of Business Economics at the University of Joensuu, and can be contacted at the Department of Economics, University of Joensuu, PO Box 111, 80101 Joensuu, Finland. E-mail: jouni.korhonen@joensuu.fi Ilkka Savolainen is a Research Professor at VTT Energy of the Technical Research Centre of Finland. He is also a Docent at the Depart- ment of Forest Products Technology of the Helsinki University of Technology, Espoo, Finland. Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–153 (2001) 153 . Eco-Management and Auditing Eco-Mgmt. Aud. 8, 144–1 53 (2001) DOI: 10. 1002/ema.160 CLEANER ENERGY PRODUCTION IN INDUSTRIAL RECYCLING NETWORKS Jouni Korhonen 1, * and Ilkka Savolainen 2 1 University. of CHP is defined as reach- ing the level of 12% in 2 010. CHP IN AN INDUSTRIAL RECYCLING NETWORK Studies conducted in Finland have indicated that significant reductions in fuel use and emission. Sons, Ltd and ERP Environment Eco-Mgmt. Aud. 8, 144–1 53 (2001) 146 CLEANER ENERGY PRODUCTION Figure 1. CHP-based energy production in an industrial recycling network. the system by providing the