Background Combined heat and power (CHP) production has clear environmental advantages. The EU Communication on the promotion of CHP says that it is imperative to encourage the more efficient use of fossil fuels and to reduce the production of green house gases that cause global warming. The fifth EC Environmental Action Programme sets a long-term approach and focuses on a global approach to sustainability. Currently, Croatia does not have approved national energy, environmental or climate change strategies and there is no government agency dedicated to rational energy use or climate change. In the process of closer cooperation between Croatia and the EU, those strategies will have to be made in line with European strategy, and necessary legislation produced. Croatia has signed and ratified the UN Framework Convention on Climate Change as an Annex I country and has pledged in the Annex of the Kyoto Protocol to reduce its greenhouse gases emissions by 5%. Therefore it will have to envisage a climate change strategy that will have to be based on new energy strategy including a co-generation strategy. Objectives The overall objective is to increase the sustainability of Croatia development whilst advancing EU priorities, objectives of the UNFCCC, and global sustainability by establishing the local capacity for development and implementation of guidelines for local co-generation sector. Also, the project aims to contribute to strengthening of co-operation, to deepen the exchange of experiences and to transfer expertise and knowledge between Portugal, Greece and EU and Croatia, in order to give technical assistance to promotion of strategies for sustainable development. The project aims to: · Identify and gather the necessary data; · Identify measures for improving the energy efficiency of the CHP system; · Evaluate environmental and social impacts and policies; · Undertake a sustainability assessment; · Define a framework for the national CHP strategy; · Establish generalised guidelines for the CHP sector; · Increase the capacity of Croatian institutions; and · Disseminate the project results to the public and key stakeholders, both national and regional. Results The beneficiary completed data aggregation on advanced management systems and elaborated measures for improving efficiency for the CHP systems. The beneficiary studied emissions optimisation of a CHP plant, defined pollution indicators and evaluated future strategies and measures needed for improving energy efficiency of the CHP system. The beneficiary also studied the social aspect of the heating system and developed social indicators (health indicator and social acceptance indicator) for the sustainability analysis of the system. Finally, the beneficiary selected different scenarios for the heating system in Zagreb. The beneficiary tried to ensure the long-term sustainability of the project through the definition of a framework for national CHP strategy in Croatia. However, the government has not yet endorsed the Act on production, distribution, and supply of heat. The capacity building effect of the project has been ensured through the development of guidelines for CHP sector and the organisation of workshops for Croatian institutions. The Ministry of Economy, Labour and Entrepreneurship confirmed that the Action plan for cogeneration promotion and development of the cogeneration tariff system have been initiated and are based on project activities. Finally, the project carried out dissemination and awareness raising activities. Contacts with relevant government officials, plant managers and branch experts, presentations, conferences, project website, and the promotional video contributed to disseminate project activities and results.