This paper evaluates possible synergies with industry, such as heat and oxygen recovery from the hydrogen production. The hydrogen production technology used in this paper is electrolysis and the calculations include the cost and energy savings for integrated hydrogen production. Electrolysis with heat recovery leads to both cost reduction and higher total energy efficiencies of the hydrogen production. Today about 15-30% of the energy supplied for the production is lost and most of it can be recovered as heat. Utilization of the oxygen produced in electrolysis gives further advantages. The integration potential has been evaluated for a pulp and paper industry and the Swedish energy system, focusing on hydrogen for the transportation sector. The calculated example shows that the use of the by-product oxygen and heat greatly affects the possibility to sell hydrogen produced from electrolysis in Sweden. Most of the energy losses are recovered in the example; even gains in energy for not having to produce oxygen with cryogenic air separation are shown. When considering cost, the oxygen income is the most beneficial but when considering energy efficiency, the heat recovery stands for the greater part. (c) 2006 Elsevier Ltd. All rights reserved.