This paper assessed the economic impact of alternative depreciation methods on the development of combined heat-and-power (CHP) systems in the Brazilian industrial sector. Alternative depreciation methods were proposed and the case study of a Brazilian chemical plant showed that the most effective depreciation method for the promotion of CHP plants in Brazil was the Matheson method with an accelerated depreciation schedule of 7 years. This alternative method was then applied to the Brazilian chemical industry as a whole, increasing its installed capacity in CHP systems by 24%. Therefore, fiscal incentives can be an interesting too] for promoting energy efficiency in the Brazilian industrial sector, promoting the expansion of CHP plants. It reduces government fiscal revenues, but it also induces the technological reposition and improves the feasibility of ventures that are not installed without this kind of incentive. (C) 2005 Elsevier Ltd. All rights reserved.