Future limitations on the availability of selected resources stress the need for increased material efficiency. In addition, in a climate-constrained world the impact of resource use on greenhouse gas emissions should be minimized. Waste management is key to achieve sustainable resource management. Ways to use resources more efficiently include prevention of waste, reuse of products and materials, and recycling of materials, while incineration and anaerobic digestion may recover part of the embodied energy of materials. This study used iWaste, a simulation model, to investigate the extent to which savings in energy consumption and CO2 emissions can be achieved in the Netherlands through recycling of waste streams versus waste incineration, and to assess the extent to which this potential is reflected in the LAP2 (currently initiated policy). Three waste streams (i.e. household waste, bulky household waste, and construction and demolition waste) and three scenarios compare current policy to scenarios that focus on high-quality recycling (Recycling+) or incineration with increased efficiency (Incineration+). The results show that aiming for more and high-quality recycling can result in emission reductions of 2.3 MtCO2 annually in the Netherlands compared to the reference situation in 2008. The main contributors to this reduction potential are found in optimizing the recycling of plastics (PET, PE and PP), textiles, paper, and organic waste. A scenario assuming a higher energy conversion efficiency of the incinerator treating the residual waste stream, achieves an emission reduction equivalent to only one third (0.7 MtCO2/year) of the reduction achieved in the Recycling+ scenario. Furthermore, the results of the study show that currently initiated policy only partially realizes the full potential identified. A focus on highest quality use of recovered materials is essential to realize the full potential energy and CO2 emission reduction identified for the Netherlands. Detailed economic and technical analyses of high quality recycling are recommended to further evaluate viable integrated waste management policies.