The objective of this study is to develop and evaluate an approach for initiating development of a local industrial symbiosis network. By maintaining the broad perspective of industrial symbiosis, which includes both material and energy flow analysis, and also taking into account the internal energy use and possibilities for energy savings, we aim to achieve a better system view that avoids both sub-optimizations and unhealthy dependencies. The approach is applied to a case based on the cooperation between the forest industry, municipality and energy service company in a small town in southern Sweden. Several possibilities for improving material and energy use by increasing integration were identified. It was concluded that it is important to have a genuine knowledge of the system studied and close contact with the actors involved, since a simple analysis of energy and material flows is not sufficient to decide which solutions might be more advantageous. It is also important to have a flexible system boundary looking at the system from different perspectives and at different levels to find the best uses for existing energy and material streams. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.