Environmental problems in the Baltic Sea are particularly serious and some researchers are talking about an ecological collapse. Emissions from industries and waste water treatment plants (WWTP) pollute the sea with heavy metals, chemicals, household waste and environmental toxins. The sludge from WWPTs is disposed in lagoons and landfills and leak out nutrition that cause eutrophication. This environmental threat needs to be recognized jointly by the BSR countries. Large WWPTs has introduced systems that handle the problems, but the majority of WWTPs in the PA are small and medium sized and they hesitate to do necessary investments due to lack of knowledge and suitable downscaled techniques .The aim of this project is to improve institutional capacity in small and medium sized municipalities and WWTPs in the PA, so that they can decrease the outflows of nutrition and heavy metals from WWTPs. This shall be done by using the sludge as a resource to produce renewable energy in a form of biogas, and to recycle phosphorus and nitrogen into fertilizers. Instead of being a waste, the sludge becomes a recourse that contributes to the reduction of CO2 emission by producing biogas and by meeting the challenge of peak phosphorus.The project will work on the development and testing of methods and techniques that facilitate the investment of municipalities. It will be done in three components which are interrelated. The aim of C3 is to produce a handbook on implementation of anaerobic digesters at smaller treatment plants. The work consists of equipment test, cross border exchange of test results and a creation of a list that describes various systems that municipalities can invest in. The aim of C4 is to describe and test how to utilize biogas effectively. Biogas may be used as a source of heat, electricity or vehicle fuel. The participating partners’ situations differ, and the most effective use in terms of environmental impact and cost will be described for every participating partner. After the digestion of the sludge, there is still some sludge left as biosolids. The aim of C5 is to develop systems enabling the use of biosolids as fertilizers in agriculture. C5 will develop a quality assurance program, QA, for heavy metal removal, hygienic control, agricultural benefit, traceability and stakeholder acceptance. The QA program will later be converted to a certification program. The traceability system will be based on GIS for high consumer credibility.The results of C3, C4 and C5 will be compiled to a comprehensive cross border handbook for small and medium sized municipalities that contains guidelines based on systems tested in three countries describing how to handle sludge in the most effective way. It will contain empirical calculation in ton of phosphorus recycled to land instead of dumped in lagoons, the possible production in kWh of renewable energy as biogas and the potential for reducing CO2 emissions. Achievements: The project has had a slow start with the change of partners and also a change of management within one of the partner organisations. Having said this, it should be noted that we are very positive about the project and many documents have been finalized during august and september. These documents will be presented and reported during the next reporting period (jul-dec 2012). The partners are positive about the work they are doing and they are currently translating their documents into english. The meetings have been very positive and we are planning additional activities in the project. A CPM plan has been implemented which states all the activities and their completion dates. All partners have been co-operating and are very active. The structure is now very clear with the implementation of the CPM plan and we feel that we can finish the project in time even though we have had some unfortunate delays. The biggest achievements so far is the implementation of new technologies in Knislinge WWTP, the cooperation between the WWTP in Höganäs together with Höganäs AB (Biogas production) as well as the WW upstream work where the municipalities compare and discuss their analysis in order to improve both sludge quality.