The potential for co-generation lies in industries which have a requirement of both heat and electricity, primarily sugar and rice mills, distilleries, petrochemical, chemical, pulp and paper, aluminum, etc. Since India is the second largest producer of sugar in the world, bagasse-based co-generation is being promoted. Since co-generation can meet both power and heat needs, it has advantages in the form of significant cost savings for the plant and reduction in emissions of pollutants.