This paper investigates effect of combined heat and power (CHP) in producing CO2 as the most important greenhouse gas (GHG). The study has been done in Sepidan industrial estate in Fars province. The assessment is examined in two different points of view. First, in global scale, which consider emission of centralized power plants and heat supply equipments in industrial state. In the next stage, the local analysis is done based on heat supply equipment in industrial state, regardless of the pollutant of power plants. With the new regulations for distributed generation (DG) in 2008 and financial incentives, private sector could enter into the business and compete with governmental sector. CHP units have advantages in efficiency and pay-back time compared to separate production and even DG. Many studies presented the advantages of CHP over conventional ways of supplying heat and power, but environmental aspect is still a matter of question. This study showed that CHP has a great potential for CO2 reduction in global point of view. On the other hand, CHP significantly increase CO2 emission in local scale. This means that if carbon dioxide is not properly distributed in the air, it will break the air quality standards of Iran department of environment.

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