Background The dairy processing sector produces a large volume of different types of residues. Currently only a small proportion of these residues are recycled and recovered, because of difficulties processing the wastewater. Objectives The overall objective was to reduce the volume of dairy waste by recycling whey, wastewater and substances found in them. The project would design a complete recovery process for high value protein and energy-containing fats that are currently discharged with wastewater from the dairy plants. A pilot plant would be built that treats and reuses the residues and recovers heat energy from the wastewater using anaerobic treatment methods. This plant would have a capacity of 450 000 m3/yr of dairy residues. The dewatered residues would be converted into organic fertiliser for use in agriculture. Energy output from the pilot plant was expected to be 18 000 MWh/yr of biogas and 10 000 MWh/yr of warm water. This would largely be reused at the dairy plant. The project was expected to have a significant demonstration value for Europe's 5 000 dairy plants, as the manufacturing process is similar in all dairies. Results The project was terminated on 01 March 2004, prior to the approved end date, because of extensive delays in completing the environmental impact assessment (EIA) and in receiving planning permission to construct the pilot plant. Therefore, the main project objectives were not reached within the project duration, and demonstration and dissemination activities were not carried out as planned. Final construction permits were granted only in May 2004, six months months later than the original project end date. Norrmejerier Ekonomiska Foerening has continued the implementation of the pilot plant, however, since these activities are being carried out with other funding and will not carry reference to LIFE, they can be regarded as irrelevant as regards LIFE project outcomes.