Assessing District-Heating Sustainability – Case Studies of CO2 Mitigation Strategies and Environmental Cost Accounting

District heating (DH) may play an important role in achieving the EU goal of a secure, competitive and sustainable energy supply. Integrated energy solutions based on technologies, such as biomass gasification for transport fuel, electricity and heat production and heat-driven absorption cooling, create new optimisation possibilities through the linkage between heat, power, cooling and transport fuel markets which may reduce the global warming contribution of the energy sector. With increasing focus on climate change impacts of greenhouse gas emissions, the environmental effects of other air pollutants should not be neglected. To achieve both a competitive and a sustainable energy supply, it is necessary to integrate environmental considerations into economic policies. Through accounting for external costs of air pollution in energy system modelling and analysis, sustainability aspects may be integrated into DH assessments. The aim of this thesis is to develop, apply and evaluate methodologies for assessing conventional and new technology solutions in a DH system; the assessments are made from a DH perspective with respect to two factors – cost-effectiveness and environmental impacts – which are either assessed separately or integrated through external cost accounting. Various CO2 mitigation strategies are evaluated with regard to the robustness of the DH system in meeting future developments of energy market prices and policies. The studies are performed using a systems approach by using the simulating DH supply model MARTES as applied to the DH system of Göteborg, Sweden. This thesis concludes that the integration of biomass gasification technology and absorption cooling technology in DH systems has the potential for cost-effective CO2 emission reduction, in line with other EU goals to increase the share of renewable sources in energy use and to increase energy efficiency. Accounting for external costs of not only climate change but also other environmental impacts of air pollution may strongly influence least-cost operations of DH systems, especially in systems that include combined heat and power plants. However, case study results show that effects on cost-effectiveness of annual DH generation are generally minor. Applying life cycle thinking to economic and environmental analyses of energy systems proves to be of great importance to the outcome and reliability of DH assessments. This thesis emphasises the importance of paying attention to environmental impacts of airborne emissions other than CO2, including emissions from upstream processes. As life cycle processes, pollutants and impact categories are covered in external cost accounting to a greater extent, the more accurate the results will be, while the accounting process will be more complex and time-consuming. However, this thesis illustrates that an external cost accounting based on a simplified approach may be as accurate as employing a more comprehensive approach