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All industrial plants cause environmental pollution by the emission of detrimental gases and other hazardous components, which are harmful for human beings, and other organisms. Diesel engine powered cogeneration (DEPC) plants burn heavy fuel oil which can be available and transported easily and the exhaust involve undesirable emissions such as solid particulates, sulfur oxides (SOx) and nitrite oxides (NOx). These emissions must remain below the maximum permissible levels defined by official organizations and international protocols. In this paper, exhaust emission characteristics of DEPC plants and the operation of DeSOx (desuiphurization) and DeNOx (denitrification) treatment units in these facilities are studied based on the exergy analysis and the linkages between exergy and environmental impacts. Exhaust emission assessment is performed by using fuel savings analysis method and exergetic efficiency. Exhaust emission reduction is expressed using an analogy to fuel savings. The results show that using separate units of power and heat production increase the fuel consumption by 34.8% with respect to existing DEPC plant and the DEPC plant can reduce NOR, CO2, and SO2 emissions, by 87.6%, 50% and 41.3%; respectively in comparison to separate power and heat productions. [ABSTRACT FROM AUTHOR]