Usage of CHP can potentially improve environmental quality by 32% in terms of carbon dioxide emissions as compared with conventional power plant.

The use of absorption chillers in CHP, in place of the conventional electric chillers which utilises chlorofluorocarbons-based refrigerants (CFC), is an additional benefit for the environment.

Distributed generation usually results in improved reliability in relation to the supply system, which is a result of lower losses incurred through the transmission and distribution networks. This increases the overall productivity of the power supply system, while reducing environmental impact.