The adopted energy efficiency directive stresses the use of excess heat as a way to reach the EU target of primary energy use. Use of industrial excess heat may result in decreased energy demand, CO2 emissions reduction, and economic gains. In this study, an energy systems analysis is performed with the aim of investigating how excess heat should be used, and the impact on CO2 emissions. The manner in which the heat is recovered will affect the system. The influence of excess heat recovery and the trade-off between heat recovery for heating or cooling applications and electricity production has been investigated using the energy systems modeling tool reMIND. The model has been optimized by minimizing the system cost. The results show that it is favorable to recover the available excess heat in all the investigated energy market scenarios, and that heat driven electricity production is not a part of the optimal solution. The trade-off between use of recovered excess heat in the heating or cooling system depends on the energy market prices and the type of heat production. The introduction of excess heat reduces the CO2 emissions in the system for all the studied energy market scenarios. (C) 2014 Elsevier Ltd. All rights reserved.