The aim of this study was to evaluate the refrigerating and air-conditioning technologies in cases of introducing both heat cascading systems and thermal recycling systems in industries located around urban areas. It is necessary to introduce heat cascading systems in the industrial sector in Japan to reduce carbon dioxide emissions. The concept of heat cascading is the multi-stage use of thermal energy by temperature level. This paper introduces three energy policies for introducing the heat cascading systems. The author develops an energy cascade model based on linear programming so as to minimize the total system costs with carbon taxes. Five cases are investigated. Carbon dioxide emission constraints result in the enhancement of heat cascading, where high temperature heat is supplied for process heating while low temperature heat is shifted to refrigeration. It was found that increasing the amount of garbage combustion waste heat could reduce electric power for the turbo compression refrigerator by promoting waste heat driven ammonia absorption refrigerator. In addition, this study proposes an energy cascade balance table with respect to the temperature level. (C) 2002 Elsevier Ltd. All rights reserved.