U.S. coal-fired or nuclear power plants are about 34 percent efficient in terms of producing electricity, which means two-thirds of the energy goes up the flue and heats the sky. All told, the U.S. power-generation sector throws away an amount of heat equivalent to the entire energy budget of Japan. Put your hand behind the tailpipe of your car when the engine is running. It is the same principle, only worse—75 to 80 percent of the energy generated by an internal combustion engine is wasted heat. Coal and single-cycle gas generating plants are the best candidates for capturing wasted energy through cogeneration. 
     Cogeneration puts otherwise-forfeited energy to work, heating and cooling homes and office or creating additional electricity. Cogeneration systems, also known as combined heat and power (CHP), capture excess heat generated during electricity production and use that thermal energy at or near the site for district heating and other purposes. The opportunity to reduce emissions and save money through cogeneration is significant because of the inherent low-efficiency of electrical generation.


     From a financial viewpoint, the adoption of cogeneration systems makes sense for many industrial and commercial uses, as well as for some residential uses. Cogeneration makes it possible for users that do not have access to renewable energy to produce more energy with the same amount, and cost, of fuel. In addition to clear financial benefits, adoption will reduce greenhouse gas emissions to the extent cogeneration reduces reliance on fossil fuels for heating and electricity.


IMPACT: In our analysis cogeneration refers to on-site CHP from natural gas in commercial, industrial, and transportation sectors. In 2014, industrial cogeneration using natural gas comprised approximately 3.2 percent of global power generation and 1.7 percent of heat generation. If adoption grows to 5.4 percent of power and 3.3 percent of heat by 2050, 4 gigatons of carbon dioxide emissions can be avoided. At an average installation cost of $1,851 per kilowatt, total installation would cost $279 billion. By replacing grid-based electricity and on-site heat generation with more efficient and less costly technology, the growth in cogeneration could produce operational savings of $567 billion over thrifty years and lifetime savings of $1.7 trillion.

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