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Different reasons such as improvement of supply security, efficiency enhancement and reduction in greenhouse gas emissions, has pushed engineers and policy makers in many countries to decide about developing distributed generation more than before. After employing large-scale Combined Heat and Power (CHP) systems for many years, rising energy price and technological developments of small heat engines have caused that small-scale CHP systems to become more economically justifiable. Micro-CHP (MCHP) systems are small-scale CHP made for utilize in residential or small commercial buildings. Considering thermal and electrical loads, utilizing MCHP systems at the residential level may lead to more efficient energy consumption. Furthermore, nowadays climate change is a very serious problem of many countries all over the world. Since in Iran, the domestic and small commercial sectors have a considerable share of energy consumption, this paper aims to investigate the effects of utilizing MCHP systems in residential buildings on environmental aspects.