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Background: Methane production as biofuels is a fast and strong growing technique for renewable energy. Substrates like waste (e.g. food, sludge fromwaste water treatment plants (WWTP), industrial wastes) can be used as a suitable resource for methane gas production, but in some cases, with elevated toxicity in the digestion residue. Former investigations have shown that co-digesting of contaminated waste such as sludge together with other substrates can produce a less toxic residue. In addition, wetlands and reed beds demonstrated good results in dewatering and detoxifying of sludge. The aim of the present study was to investigate if the toxicity may alter in industrial sludge co-digested with oat and post-treatment in reed beds. In this study, digestion of sludge from Bjorkborn industrial area in Karlskoga (reactor D6) and co-digestion of the same sludge mixed with oat (reactor D5) and post-treatment in reed beds were investigated in parallel. Methane production as well as changes in cytotoxicity (Microtox(R); ISO 11348-3), genotoxicity (Umu-C assay; ISO/13829) and AhR-mediated toxicity (7-ethoxyresorufin-O-deethylase (EROD) assay using RTW cells) were measured. Results: The result showed good methane production of industrial sludge (D6) although the digested residue was more toxic than the ingoing material measured using microtox30min and Umu-C. Co-digestion of toxic industrial sludge and oat (D5) showed higher methane production and significantly less toxic sludge residue than reactor D6. Furthermore, dewatering and treatment in reed beds showed low and non-detectable toxicity in reed bed material and outgoing water as well as reduced nutrients. Conclusions: Co-digestion of sludge and oat followed by dewatering and treatment of sludge residue in reed beds can be a sustainable waste management and energy production. We recommend that future studies should involve co-digestion of decontaminated waste mixed with different non-toxic material to find a substrate mixture that produce the highest biogas yield and lowest toxicity within the sludge residue.