There is a strong connection between economic growth and development of cities. Economic growth tends to stimulate city growth, and city economies have often shaped innovative environments that in turn support economic growth. Simultaneously, social and environmental problems related to city growth can be serious threats to the realization of the socio-economic contributions that cities can make. However, as a result of considerable diversity of competences combined with interactive learning and innovation, cities may also solve these problems. The 'urban order' may form a platform for innovative problem solving and potential spill-over effects, which may stimulate further economic growth and development. This paper discusses how waste problems of cities can be transformed to become part of new, more sustainable solutions. Two cases are explored: Aalborg in Denmark and Malmo in Sweden. It is shown that the cities have the potential to significantly contribute to a more sustainable development through increased material recycling and energy recovery. Waste prevention may increase this potential. For example, instead of constituting 3% of the total greenhouse gas emission problem, it seems possible for modern European cities to contribute to greenhouse gas emission reduction by 15% through up to date technology and integrated waste management systems for material and energy recovery. Going from being part of the problem to providing solutions; however, is not an easy endeavour. It requires political will and leadership, supportive regulatory frameworks, realistic timetables/roadmaps, and a diverse set of stakeholders that can provide the right creative and innovative mix to make it possible.