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. CHP-
based waste utilization, in both production
and end-consumption systems, seems to be a
suitable testing ground for industrial ecosys-
tem theory building alongside comparative
case studies.
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BIOGRAPHY
Dr Jouni Korhonen holds a PhD in Business
Studies. 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:
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.
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153