This paper discusses the environmental and economic performance of an innovative micro-CHP system based on membrane reactor and PEM fuel cell. The performance is compared with a PEM based micro-CHP system using a standard steam reforming fuel processor. The environmental analysis is carried out using Life Cycle Assessment while the economic assessment determines the maximum system cost to make it cost-effective over the lifetime. The analysis is performed assuming six different scenarios featuring three different residential loads in two different countries (Italy and Germany) to assess the impact of thermal/electric loads and NG/electricity costs on the results. Results show that the innovative system enables to reduce or to have similar impacts for the carbon footprint depending on the assumed scenarios, while water withdrawal and human health can be positive or negative depending on the case. From an economic point of view, both the micro-CHP system, and in particular the innovative solution, can be competitive with respect to conventional supply. The resulting annual economic saving allows defining the maximum capital cost of the system for each scenario.