District heating systems can be found in many Swedish municipalities and have a substantial share of the heat market. On an international comparison there is, however, only limited combined heat and power generation in Sweden. As a result, there is a potential for expansion of combined generation. In a deregulated European electricity market electricity from additional co-generation should replace the environmentally worst and most expensive coal condensing power plants. Besides the current demand for district heating, there is a growing demand for district cooling. Two absorption chillers thermally driven by 90°C district heating have been installed at the University of Linköping. They use water as working fluid and lithium bromide as absorbent. The 5 MW installed cooling capacity currently supply about 5 GWh of district cooling per year. District heating driving the absorption chillers is delivered by the local utility and may be produced in a waste incineration plant of by co-generation using renewable fuels. Increased co-generation in Sweden could be an important measure towards sustainability through reduction of global CO2 emissions. The combination of bio fuelled co-generation and absorption cooling leads to further benefits. Absorption cooling generally prolongs the utilization time of co-generation and entailing additional electric power production. It can also result in avoided purchases of electricity for conventional vapor compression refrigeration machines. Compared to a more traditional set up, with neither district cooling nor co-generation, the total amount of CO2 reduction through the displacement of coal condensing power will be significant.