In the pulp and paper industry, energy costs represents a relatively large proportion of the value of production. When investing in new equipment, considerations concerning boundary conditions, such as electricity and oil prices, are therefore of great importance. A vital requirement is the identification of other key parameters influencing production costs as well as possible interaction between these parameters. In this paper, a sensitivity analysis is accomplished by using an optimization model that minimizes the system cost combined with a systematic approach involving a statistical method. The paper analyses the possibilities of investing in a new chemical recovery cycle, including a new recovery boiler and evaporation plant, at a Swedish board mill. The study includes a survey of future changes, together with forecasts of boundary conditions, such as changes in the price of electricity and oil. Interactions between different parameters are also examined. Copyright (C) 2002 John Wiley Sons, Ltd.