The aim of this consequential life cycle assessment (LCA) is to compare district heating based on waste incineration with combustion of biomass or natural gas. The study comprises two options for energy recovery (combined heat and power (CHP) or heat only), two alternatives for external, marginal electricity generation (fossil lean or intense), and two alternatives for the alternative waste management (landfill disposal or material recovery). A secondary objective was to test a combination of dynamic energy system modelling and LCA by combining the concept of complex marginal electricity production in a static, environmental systems analysis. Furthermore, we wanted to increase the methodological knowledge about how waste can be environmentally compared to other fuels in district-heat production. The results indicate that combustion of biofuel in a CHP is environmentally favourable and robust with respect to the avoided type of electricity and waste management. Waste incineration is often (but not always) the preferable choice when incineration substitutes landfill disposal of waste. It is however, never the best choice (and often the worst) when incineration substitutes recycling. A natural gas fired CHP is an alternative of interest if marginal electricity has a high fossil content. However, if the marginal electricity is mainly based on non-fossil sources, natural gas is in general worse than biofuels. (c) 2006 Elsevier Ltd. All rights reserved.