Cogeneration is a technique that allows the production of heat (in the form of hot water or water vapour) and electricity in a single process. These plants operate by means of gas turbines or engines, and typically use natural gas as their form of primary energy. The process of heat/electricity production through cogeneration delivers a saving of 25% on primary fuel consumption compared to the separate production of heat and electricity. It can be applied in many different settings, from industry and households to agriculture. District heating networks can also include cogeneration.

The Cogeneration Directive (2004/8/EC) was adopted in 2004 and is designed to establish a transparent framework to promote and facilitate the installation of cogeneration plants.

Cogeneration plants can achieve energy efficiency levels of around 90%. The development of efficient cogeneration plants could avoid the emission of 127 million tonnes of CO2 in the EU in 2010 and 258 million tonnes in 2020. An analysis of implementation reports by Member States in 2009 showed that currently there are 97 GWe of cogeneration capacity installed in the EU, with at least an additional 122GWe of potential capacity which it would be economic to deploy before 2020. It is likely that a review of the Cogeneration Directive will be one of the measures proposed under the review of the the Energy Efficiency Action Plan.

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